Which of the following statements concering risk management is NOT CORRECT? a. Risk management can reduce the volatility of cash flows, and this decreases the probability of bankruptcy. Ob. Risk management makes sense for fimms directly engaged in activities that involve commodities whose values can be "hedged, but it doesn't make much sense for most other firms. Companies with volatile earnings pay more taxes than companies with more stable earnings due to the treatment of tax Occredits and the rules governing corporate loss carry-forwards and carry-backs. Therefore, our tax system encourages risk management to stabilize earnings. d. Risk management can reduce the likelihood of low cash flows, and therefore reduce the probability of financial distress Risk management involves identifying events that could have adverse financial consequences and then taking actions to Oe. prevent and/or to minimize the damage caused by these events. QUESTION 6 An option that gives the holder the right to sell a stock at a specified price at some time in the future is called a(n) a. Call option b. Put option Oc Out-of-the-money option. d. Naked option e. Covered option are tante all ansters