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NEW QUESTION: 1
Refer to the exhibit. A network administrator is configuring an EtherChannel between SW1 and SW2. The SW1 configuration is shown. What is the correct configuration for SW2?
A. interface FastEthernet 0/1
channel-group 1 mode active
switchport trunk encapsulation dot1q
switchport mode trunk
interface FastEthernet 0/2
channel-group 1 mode active
switchport trunk encapsulation dot1q
switchport mode trunk
B. interface FastEthernet 0/1
channel-group 1 mode desirable
switchport trunk encapsulation dot1q
switchport mode trunk
interface FastEthernet 0/2
channel-group 1 mode desirable
switchport trunk encapsulation dot1q
switchport mode trunk
C. interface FastEthernet 0/1
channel-group 1 mode passive
switchport trunk encapsulation dot1q
switchport mode trunk
interface FastEthernet 0/2
channel-group 1 mode passive
switchport trunk encapsulation dot1q
switchport mode trunk
D. interface FastEthernet 0/1
channel-group 2 mode auto
switchport trunk encapsulation dot1q
switchport mode trunk
interface FastEthernet 0/2
channel-group 2 mode auto
switchport trunk encapsulation dot1q
switchport mode trunk
Answer: B
NEW QUESTION: 2
A. Option C
B. Option D
C. Option E
D. Option B
E. Option A
Answer: C,D
NEW QUESTION: 3
Examine the output of the 'get router info ospf interface' command shown in the exhibit; then answer the question
below.
Which statements are true regarding the above output? (Choose two.)
A. The port4 interface is connected to the OSPF backbone area.
B. There are at least 5 OSPF routers connected to the port4 network.
C. The local FortiGate has been elected as the OSPF backup designated router
D. Two OSPF routers are down in the port4 network.
Answer: A,D
NEW QUESTION: 4
Carl Cramer is a recent hire at Derivatives Specialists Inc. (DSI), a small consulting firm that advises a variety of institutions on the management of credit risk. Some of DSI's clients are very familiar with risk management techniques whereas others are not. Cramer has been assigned the task of creating a handbook on credit risk, its possible impact, and its management. His immediate supervisor, Christine McNally, will assist Cramer in the creation of the handbook and will review it. Before she took a position at DSI, McNally advised banks and other institutions on the use of value-at-risk (VAR) as well as credit-at-risk (CAR).
Cramer's first task is to address the basic dimensions of credit risk. He states that the first dimension of credit risk is the probability of an event that will cause a loss. The second dimension of credit risk is the amount lost, which is a function of the dollar amount recovered when a loss event occurs. Cramer recalls the considerable difficulty he faced when transacting with Johnson Associates, a firm which defaulted on a contract with the Grich Company. Grich forced Johnson Associates into bankruptcy and Johnson Associates was declared in default of all its agreements. Unfortunately, DSI then had to wait until the bankruptcy court decided on all claims before it could settle the agreement with Johnson Associates.
McNally mentions that Cramer should include a statement about the time dimension of credit risk. She states that the two primary time dimensions of credit risk are current and future. Current credit risk relates to the possibility of default on current obligations, while future credit risk relates to potential default on future obligations. If a borrower defaults and claims bankruptcy, a creditor can file claims representing the face value of current obligations and the present value of future obligations. Cramer adds that combining current and potential credit risk analysis provides the firm's total credit risk exposure and that current credit risk is usually a reliable predictor of a borrower's potential credit risk.
As DSI has clients with a variety of forward contracts, Cramer then addresses the credit risks associated with forward agreements. Cramer states that long forward contracts gain in value when the market price of the underlying increases above the contract price. McNally encourages Cramer to include an example of credit risk and forward contracts in the handbook. She offers the following:
A forward contract sold by Palmer Securities has six months until the delivery date and a contract price of
50. The underlying asset has no cash flows or storage costs and is currently priced at 50. In the contract, no funds were exchanged upfront.
Cramer also describes how a client firm of DSI can control the credit risks in their derivatives transactions.
He writes that firms can make use of netting arrangements, create a special purpose vehicle, require collateral from counterparties, and require a mark-to-market provision. McNally adds that Cramer should include a discussion of some newer forms of credit protection in his handbook. McNally thinks credit derivatives represent an opportunity for DSL She believes that one type of credit derivative that should figure prominently in their handbook is total return swaps. She asserts that to purchase protection through a total return swap, the holder of a credit asset will agree to pass the total return on the asset to the protection seller (e.g., a swap dealer) in exchange for a single, fixed payment representing the discounted present value of expected cash flows from the asset.
A DSI client, Weaver Trading, has a bond that they are concerned will increase in credit risk. Weaver would like protection against this event in the form of a payment if the bond's yield spread increases beyond LIBOR plus 3%. Weaver Trading prefers a cash settlement.
Later that week, Cramer and McNally visit a client's headquarters and discuss the potential hedge of a bond issued by Cuellar Motors. Cuellar manufactures and markets specialty luxury motorcycles. The client is considering hedging the bond using a credit spread forward, because he is concerned that a downturn in the economy could result in a default on the Cuellar bond. The client holds $2,000,000 in par of the Cuellar bond and the bond's coupons are paid annually. The bond's current spread over the U.S. Treasury rate is
2.5%. The characteristics of the forward contract are shown below.
Information on the Credit Spread Forward
Determine which of the following is most likely responsible for the difficulty Cramer faced when transacting with the firm Johnson Associates.
A. A credit protection provision.
B. A jump-to-default provision.
C. A cross-default provision.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
The provision responsible for Cramer's difficulty is the cross-default provision. A cross-default provision specifics that the borrower is in default of that agreement if it defaults on any of its borrowing/credit agreements. Jump-to-default risk is another name for current credit risk. (Study Session 14, LOS 40.i)
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