15. Which of the following is a potential benefit of hedging with derivatives?

A. All of these

b. Lower cost of capital

c. Reduced cash flow variability

d. Increased profitability

12. Which of the following statements regarding credit lines is incorrect?

a. Compensating balances can be used by the lender to increase the effective borrowing cost of the credit line above the stated interest rate on the line

b. All of these are incorrect

c. The unused portion of a credit line appears on the firms balance sheet

d. Credit lines can be arranged on a formal or informal basis and are typically reviewed annually for renewal

11. All else constant, which of the following current asset financing strategies is most likely to lower profitability?

a. Aggressive

b. Conservative

c. Transitory

d. Moderate