Q16-The significance of the gearing ratio is that it increases the risk of returns. With leverage the variability of returns to equity is much greater. Select one: True False Q17-Futures contracts are divided into two classes, commodity futures and financial futures. Select one: True False Q18-The WACC is computed using before-tax costs of each of the sources of financing. Select one: True False Q19-There are several reasons risk management might increase the value of a firm. Risk management allows corporations: Select one: a.to utilize their comparative advantages in hedging relative to the hedging ability of individual investors. b.to maintain their capital budget over time. c.all of these answers d.to avoid costs associated with financial distress. e.to increase their use of debt