1. Which of the following statement about hedging with derivative is true?

1. Options are always a superior hedging instrument compared to forward
2. Interest rate swaps minimize the net cost of borrowing
3. Forward lock you into a price while options place a limit on net prices
4. Interest rate caps minimize the net cost of borrowing
5. Forward are always superior hedging instrument compared to forward

2. What is the commonly used name (acronym) of one of the most widely recognized frameworks for Enterprise Risk Management?

1. OCRM
2. COSO
3. BetRisk
4. TTRM
5. FinRisk

3. Firm A has a debt-equity ratio of 0.6. Firm B has a debt equity ration of 0.7. Cerise paribus (all nothing things being equal), the return on Firm B is:

1. Unaffected by the debt equity ratio
2. Less volatile than the return on equity of firm A
3. Equally as volatile as the return of equity of Firm A
4. More volatile than the return on equity of Firm A

4. Accounting gain and losses due to changing foreign assets and revenue into the home currency are known as:

1. Translation risk
2. Exchange risk
3. Governance risk
4. Transaction risk

5. Which of the following are not included in the calculation of project cash flows for a capital budgeting analysis?

1. Government subsidies
2. Recovery of net working capital
3. Cannibalization
4. Financing costs
5. Capital cost allowances