Your network contains an Active Directory domain.
The domainis configured as shown in the exhibit:

Usersin the Financeorganizational unit (OU) frequently log on to client computersin the Human
Resources OU.
You need to meet the following requirements:
Allof the user settingsin the Group Policy objects (GPOs) linkedto both the Finance OUand the
Human Resources OUmust be applied to finance userswhen they log on to client computersin the
Engineering OU.
Onlythe policy settingsin the GPOs linkedto the Finance OUmust be applied to finance userswhen
they log on to client computersin the Finance OU.
Policy settingsin the GPOs linkedto the Finance OUmust not be applied to usersin the Human
Resources OU.
What should you do?
Exhibit:

A.
Modify the Group Policy permissions.

B.
Enable block inheritance.

C.
Configure the link order.

D.
Enable loopback processing in merge mode.

E.
Enable loopback processing in replace mode.

F.
Configure WMI filtering.

G.
Configure Restricted Groups.

H.
Configure Group Policy Preferences.

I.
Link the GPO to the Finance OU.

J.
Link the GPO to the Human Resources OU.

Explanation:
We have to use loopback processing in merge modeif we want all User Configuration settings from the GPO’s
that are linked to the Sales OU and the EngineeringOU to be applied.
Reference 1:
http://technet.microsoft.com/en-us/library/cc782810.aspx
Loopback processing with merge or replace
Setting loopback causes the User Configuration settings in GPOs that apply to the computer to be applied to
every user logging on to that computer, instead of (in replace mode) or in addition to (in merge mode)the User
Configuration settings of the user. This allows youto ensure that a consistent set of policies is applied to any
user logging on to a particular computer, regardless of their location in Active Directory.
Loopback can be set to Not Configured, Enabled, or Disabled. In the Enabled state, loopback can be setto
Merge or Replace. In either case the user only receives user-related policy settings.
Loopback with Replace—In the case of Loopback with Replace, the GPO list for the user is replaced in its
entirety by the GPO list that is already obtained for the computer at computer startup (during step 2 in Group
Policy processing and precedence). The User Configuration settings from this list are applied to the user.
Loopback with Merge—In the case of Loopback with Merge, the Group Policy object list is a
concatenation. The default list of GPOs for the user object is obtained, as normal, but then the list of GPOs
for the computer (obtained during computer startup)is appended to this list. Because the computer’s GPOs
are processed after the user’s GPOs, they have precedence if any of the settings conflict.
Reference 2:
http://kudratsapaev.blogspot.in/2009/07/loopback-processing-of-group-policy.html
For a clear and easy explanation of Loopback Processing. Recommended!
Reference 3:
Windows Server 2008 R2 Unleashed (SAMS, 2010)
page 1028
Loopback Processing
When a user is processing domain policies, the policies that apply to that user are based on the location of the
user object in the Active Directory hierarchy. The same goes for domain policy application for computers. There
are situations, however, when administrators or organizations want to ensure that all users get the same policy
when logging on to a particular computer or server.For example, on a computer that is used for training or on a
Remote Desktop Session Host, also known as a Terminal Server, when the user desktop environment must be
the same for each user, this can be controlled by enabling loopback processing inReplace modeon a policy
that is applied to the computer objects.
To explain a bit further, if a domain policy has the loopback settings enabled and set to Replace mode, any
settings defined within that policy in the User Configuration node are applied to all users who log onto the
computer this particular policy is applied to. Whenloopback processing is enabled and configured in Merge
modeon a policy applied to a computer object and a user logs on, all of the user policies are applied andthen
all of the user settings within the policy applied to the computer object are also applied to the user. This ensures
that in either Replace or Merge mode, loopback processing applies the settings contained in the computerlinked policies last.