1. Fiesta Foundations, Inc. (FF) is a zero-growth company that currently has zero debt, and it has the data shown below. Now the company is considering using some debt, moving to the market value capital structure indicated below. The money raised would be used to repurchase stock. It is estimated that the increase in risk resulting from the additional leverage would cause the required rate of return on equity to rise somewhat, as indicated below.

$ 48.85

$ 53.57

$ 45.45

$ 51.61

$ 56.02

2. Concentrated porftolio strategies are good attractive because:

A) Their potential to generate alpha

B) Their ability to track market indices

C) Their low risk