1st fill in the blank answer choices: increasing; decreasing

2nd fill in the blank answer choices: increasing; decreasing

Firms deal with different types of risk in their day-to-day operations and adopt risk management strategies. It is important to understand why firms manage risk. A company's share price is a function of two factors: the discounted value of its free cash flows and its weighted average cost of capital (WACC). According to financial theory, the company's managers should accept and implement a risk management strategy if the implementation of the strategy leads to an increase in the price of the firm's the firm's expected common stock. An increase in share price will occur when the strategy involves ________the firm's expected future free cash flows and/or ________ the company's WACC. Tampa Trucking Company has applied risk management techniques in an effort to reduce the volatility of its cash flows and to decrease the probability of its bankruptcy. Which of the following objectives is management attempting to achieve through its use of risk management techniques? Check all that apply. Improve management's opportunities for earning bonuses and additional compensation Improve its ability to attract lower-cost debt capital and expand its debt capacity Develop comparative advantage in hedging