In the case of United Grains Growers Ltd$.$ UGG estimated that it would need $C$$$150$ million to carry out its strategic plans over the coming two years. Will its internal resources provide reliable funding for this program? How much external funding might it need?

Like most firms, UGG faces a variety of risks. What elements of the business $($revenues$,$ costs, investment needs, ability to raise financing$)$ might be affected by each risk? What executives in the firm are responsible for handling the risks listed in Exhibit $5$ and $6,$ and how can UGG modify its exposures?

Why should UGG $($or any other firm$)$ worry about these risks if investors can diversify them away? Hint: Think about the imperfections that the M&M model assumes do not exist. How can firms change their cash flows $($and affect value$)$ in ways that investors cannot do on their own? Might managers and shareholders judge the "acceptable" level of risk differently?

Do you think an insurer would be more willing to write a contract with UGG that pays UGG if the firm's grain handling divisions profits are below a certain level or a cotract that pays them money if Canadian grain volumes are below a certain level? Why?