Pass4sure 640-554 Question Answer

Which type of Layer 2 attack causes a switch to flood all incoming traffic to all ports?

A. MAC spoofing attack
B. CAM overflow attack
C. VLAN hopping attack
D. STP attack

Answer: B


What is the best way to prevent a VLAN hopping attack?

A. Encapsulate trunk ports with IEEE 802.1Q.
B. Physically secure data closets.
C. Disable DTP negotiations.
D. Enable BDPU guard.

Answer: C

Pass4sure 640-554 Question Answer

Which type of Layer 2 attack causes a switch to flood all incoming traffic to all ports?

A. MAC spoofing attack
B. CAM overflow attack
C. VLAN hopping attack
D. STP attack

Answer: B


What is the best way to prevent a VLAN hopping attack?

A. Encapsulate trunk ports with IEEE 802.1Q.
B. Physically secure data closets.
C. Disable DTP negotiations.
D. Enable BDPU guard.

Answer: C

Cisco partners with bot makers Gupshup and API.ai

Cisco announced a partnership Monday with bot-building platforms Gupshup and API.ai that allows thousands of bots to quickly join Cisco Spark and Cisco Tropo platforms. It also turns up the intensity in competition between enterprise team communication chat apps like Skype and Slack.

The announcement was made during Cisco Live, a four-day Cisco event taking place in Las Vegas this week.

Gupshup built an SMS social network of more than 50 million users, mainly in India, before becoming an enterprise messaging service company in 2010. Today, it processes four billion messages a month. Machine learning and bot builder company API.ai is an early leader in conversational user interfaces. API.ai opened the API last year to its auditory personal assistant, which predates Cortana, Alexa, and Siri.

The integration extends Cisco’s reach to more than 10,000 API.ai developers. Roughly 2,500 developers have made 4,000 bots since Gupshup opened its bot platform earlier this year, said CEO Beerud Sheth. More than 30,000 SMS developers also use Gupshup.

Cisco Spark has been busy in recent months.

Following an $80 million investment in developers’ bot ideas made by Slack in December 2015, in March, Cisco created the Spark Innovation Fund, a $150 million pledge to direct investment in Cisco Spark bots.

Last month, Cisco partnered with IBM to integrate software from the legacy tech giant and Watson’s A.I. and natural language processing with its own products, starting with Cisco Spark. That partnership will begin by pairing Cisco and IBM software for chat, email, and video conferences.

“Every bot on our platform will now automatically work with Cisco Spark,” Sheth said.

Both Gupshup and API.ai allow the quick creation of bots for a dozen voice or chat apps, from Slack to Facebook Messenger to Twilio.

How We Think About Innovation at Cisco

No one doubts that the future belongs to the Internet of Things. Drones for refrigerators, widely planted, small medical devices, industrial robots, machines now with other devices, exchange data and communicate without human guidance, perform increasingly complex tasks. Gartner predicts there will be more connected than 6.4 million "everything" in use this year, and forecasts cover everything IO 21 billion in 2020 - nearly three for every human on the planet. In the manufacturing sector alone, IDC intelligence firm expects the market to grow to about 100 billion $ for IO in 2018, five years annual growth rate (CAGR) of 18% combined.

All these changes are new technologies that enable faster, safer, need for machines to share data and processing the way. To keep the new standards, architecture and infrastructure will have to develop at the same speed. The question is how to cope with Cisco and other companies to do this - how to speed up the process of innovation, especially technological change threatens to upend our current business model.

At Cisco, we are learning to answer these questions through three initiatives to expand our base of knowledge bringing together multiple perspectives: embracing diversity within our walls; reach across industries; and creating alliances with former (and current) competitors.

Internal diversity

A study of 2013 found that companies with a diverse workforce - both culturally and in terms of professional experience -. "Out innovate and outperform other employees of these companies are 45% more likely to report that the quota market business grew over the previous year and 70% more likely to report that the company captured a new market. "This makes intuitive sense (new ideas come from fresh faces), so in Cisco, have tried to bring together people from different backgrounds, education and geographic origins of new avenues of opportunity.

We find that innovation is derived from the dynamic created by putting people with different backgrounds together; that arises naturally from the tensions that exist between the opposing needs. For example, if some players within a team tend to be risk averse (ie managers of corporate risks) and others not (a group of innovation), incorporating input from risk managers' produce more innovative and viable ideas if the group had not had to synthesize opposing views.

Experts from outside industries

Including experts from other industries - especially the most different - can offer the same benefits to solve problems. For example, we recently hired a high-end watchmaking industry experts to help us develop a program for customers in emerging markets. We had some of the new generation as it would be to improve some of the markets that have long desired products, but we believe our latest products too expensive. Development of new markets for the inventory of unsold and become a specialty at many luxury goods business, so it was natural for us to be in this section for its expertise in the area.

In this case, an adaptation of solutions for customers in specific geographic areas Cisco was new. If you do, - even the concept of do - need to think outside of our walls.

Partnerships with outside organizations

We believe that cooperation is one of the best ways to spread the knowledge of a company. To advance the development of computer technology in May and architecture, Cisco, Microsoft, Ericsson and other major players cooperate, fog consortium.

In this project Ledger, IBM, Intel, Cisco, and others have come together to explore new business opportunities for Blockchain - A dynamic transactions executed first transfer of the Bitcoin development and registration of credit bureau - which can allowing anyone to share anything that carries value (stocks, bonds, mortgages, as the car) safe, reliable, transparent and automatic. This technology can be costly intermediaries, and close loopholes that allow gambling operator systems eliminate.

Associated with bringing many minds to the table, opening up new sources of investment partnerships. A company does not have to pour resources into creating a new idea (while diverting capital and the core revenue generator). Investment that can be used for prototyping, pilot, and building preservation, while the initial investment in the idea or technology to be shared. In fact, for some partners to provide some resources are less expensive than others. Hardware manufacturer can provide computing power easier than others, and a bank can actual data (anonymous) deal to "Sandbox" provide for development. Even companies such as brokerage and financial services institutions Blockchain can be disrupted, you may want to ensure your communication partner for the future.

As business continues to disrupt industrial digitization on many fronts, a separate internal approach to innovation is increasingly sub-optimal and impractical. At the same time, the opportunities presented by new technologies such as the Internet of Things are huge - if the development strategy that embraces diversity, industrial crossing in foreign expertise and experience, and recruiting new partners close .

Pass4sure 640-554 Question Answer

Which statement describes a best practice when configuring trunking on a switch port?

A. Disable double tagging by enabling DTP on the trunk port.
B. Enable encryption on the trunk port.
C. Enable authentication and encryption on the trunk port.
D. Limit the allowed VLAN(s) on the trunk to the native VLAN only.
E. Configure an unused VLAN as the native VLAN.

Answer: E

Pass4sure 640-554 Question Answer

Which statement is true about vishing? 

A. Influencing users to forward a call to a toll number (for example, a long distance or international number)
B. Influencing users to provide personal information over a web page
C. Using an inside facilitator to intentionally forward a call to a toll number (for example, a long distance or international number)
D. Influencing users to provide personal information over the phone

Answer: D                                                  

Which item is the great majority of software vulnerabilities that have been discovered? 

A. Stack vulnerabilities
B. Heap overflows
C. Software overflows
D. Buffer overflows

Answer: D

How Cisco Could Become More Valuable

Summary

• How can a company access capital?
• What is the cost of equity and the cost of debt for Cisco?
• Would it make sense to increase leverage?
• Issuing debt in other currencies could be a good strategy as well.

Cisco (NASDAQ:CSCO) is a major tech company which is well known to many investors. In this article I'll not look at the growth outlook or dividend but rather at the company's capital allocation strategy.

Cisco, as any other company, has two sources of capital it can access: Debt and equity. Access to new capital via equity offerings is generated by issuing new shares (or selling treasury shares). There are several ways to calculate the cost of equity, one of them is via the Capital Asset Pricing Model (CAPM):

The cost of equity is calculated by multiplying the company's beta (which measures the company's volatility relative to the broad market) with the equity risk premium and adding the risk free rate investors can get when not investing in the stock market. In Cisco's case this means we multiply the company's beta of 1.31 with the equity risk premium of 4.4% (the average stock market return over the last ten years of 6.3% minus the risk free rate of 1.9% - measured by US ten year government bonds). We then add the risk free rate of 1.9% and we get to the company's cost of equity of 7.6%.

Another way to look at a company's cost of equity is the so called earnings yield, which is the inverse of the company's PE ratio. A company trading at 14 times earnings thus has an earnings yield (and, according to this approach, a cost of equity) of 7.1%.

Both of these approaches do not give us the company's cash cost though, which would be calculated via the company's dividend: Cisco pays a dividend yielding 3.7%, thus the cash cost of financing the business via equity is 3.7% as well.

Cisco can, however, finance its business via debt as well, by issuing bonds or taking on long-term debt in other ways. The cost of debt is pretty clear - we just have to look at the weighted interest rate the company is paying and adjust this number for the company's tax rate (since interest payments are a pre-tax cost, unlike dividends, which are paid with after-tax earnings). The cost of debt also is the cash cost of debt. In Cisco's case, using a weighted interest rate of 2.5% and the company's tax rate of 20% gets us to a cost of debt of 2.0% [calculated as 2.5% * (1-0.20)].

We can thus say that Cisco's cost of debt is not only vastly lower than the company's cost of equity, it is even a lot lower than the company's cash cost of equity (2.0% for debt versus 3.7% for equity).

If Cisco would require new capital for its business, it would thus be opportune to finance these capital requirements by issuing debt instead of issuing new equity. Luckily Cisco is in a position where the company does not require new capital. Cisco is easily able to finance all of its capital needs (e.g. for capex) via the cash flows the company generates. Cisco even has substantial free cash flows left $11.3 billion in 2015. Some of this is paid out to investors via dividends ($5.2 billion annually at the current dividend of $1.04 p.a.), the rest is available for acquisitions, share repurchases or paying down debt. In Cisco's case, with the cash cost of equity being a lot higher than the cash cost of debt, it makes more sense to repurchase the company's common stock instead of paying down debt.

We can go even one step further and ask the following question: Would it make sense to increase the company's debt load and use the proceeds to buy back Cisco's shares? Let's look at an example: If Cisco took on $10 billion in debt, the company's after-tax cost for said debt would amount to $200 million (using the average after-tax cost of debt of 2.0% from above), or possibly even less: With its last bonds sale, Cisco locked in an average interest rate of 1.8% (which means an after-tax cost of debt of 1.5% [1.8% * (1-0.20)]. In order to be conservative here, let's still calculate with an average cost of 2.0% though.

With $10 billion in cash, Cisco could repurchase 353 million shares at the current share price of $28.30, which means that Cisco's (diluted) share count would be 4.74 billion. A reduction of 353 million shares means that Cisco saves $370 million in annual dividend payments. The company's cash flow situation would thus improve by making such a move: Cisco's interest expense would increase by $250 million, its net income and cash flows would drop by $200 million (and its tax expense would drop by $50 million), but its dividend payments would decline by $370 million. Cisco's free cash flows (after dividend payments) would thus improve by $170 million. This obviously is beneficial for the company as it means Cisco would have more money left over for acquisitions, (even more) buybacks or dividend increases.

At the same time such a move would improve Cisco's earnings per share, which ultimately decides each share's value: Cisco's net income would drop $200 million to $10.1 billion, but the reduced share count would mean that each share's portion of these earnings would grow to $2.13 from the current level of $2.02.

Such a move would thus be beneficial in two ways: The company's cash costs for its capital would drop by $170 million, which means higher available free cash flows (after dividends), and at the same time investors would see additional earnings per share growth, which makes each share more valuable.

Luckily Cisco's management knows about this and has repeatedly issued new debt over the last year (the last bond sale, in February totaled $7 billion). With Cisco's new $15 billion share repurchase program, which was announced in February as well, Cisco will be able to reduce the share count substantially (by eleven percent, or 540 million shares at the current price), which will lead to additional earnings per share growth of 12% and savings of $560 million in annual dividend payments.

Cisco could, as an alternative to bond sales denominated in dollars, sell bonds denominated in other currencies such as the Euro or Yen. This is a strategy other companies such as Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT) have used in the past and it bears some advantages: First, debt in these currencies is, on average, cheaper than debt in dollars, due to the very low interest rates in Japan and Europe, which can be blamed on the ECB's and BOJ's lower rates relative to the Fed's rates.

As a second advantage, issuing debt in other currencies provides a hedge against unfavourable currency movements:

If Cisco sold bonds worth €5 billion and converted the proceeds to dollars, Cisco would get $5.6 billion which it could then use to buy back its own shares (or any other use). At the time of maturity the exchange rate can either be the same as right now (1.12), lower or higher. If the rate is the same, nothing happens. Cisco just would have the advantage of slightly lower interest expenses due to a lower interest rate.

If the Euro is higher, Cisco would have to pay more than $5.6 billion to get €5 billion to pay back the bond (which would be disadvantageous), but would benefit from higher income from its European business (due to higher revenues and earnings when calculated in dollars).

If the Euro is lower, Cisco would have to pay less than $5.6 billion to get €5 billion to pay back the bond, which would be advantageous. This would (partially) offset lower revenues and net income from Cisco's European business.

Thus issuing debt in other currencies can provide a hedge against unfavorable exchange rates and lower interest rates at the same time, I thus would not be surprised if Cisco followed other major companies and started issuing bonds denominated in Euros or Yen in the future.

Takeaway

Cisco's cost of debt is very low, lower than the cost of equity and even lower than Cisco's cash cost of equity (i.e. its dividend cost). It makes sense for the company to increase leverage and use the proceeds to reduce the number of shares. In recent months Cisco seems to make moves in this direction, issuing more debt at very low rates and increasing the buyback program.

Issuing debt in other currencies would be an option as well, since this provides even lower interest rates and has the added benefit of working as a hedge against unfavorable currency movements.