Which of the following statements is false? a. The firm can probably hedge more effectively than individual shareholders because the firm's managers are likely to have better information about the firm's risk exposure. b. The firm can probably hedge more efficiently than individual shareholders because the firm faces proportionately lower transaction costs than individual shareholders. c. The firm faces proportionately higher transaction costs than individual shareholders entering into derivatives contracts. d. The firm is likely to have a comparative advantage in hedging over individual. e. None of the above Which of the following statements is true regarding corporate risk management? a. Hedging reduces the probability of bankruptcy and increases the cost of debt. b. By increasing the firm's borrowing capacity, hedging can the probability that the firm lacks the financing needed to take on positive NPV projects. c. Hedging enhances the effectiveness of incentive-based compensation by increasing the amount of risks that are out of mangers' control d. Hedging will not reduce a firm's expected tax expense if the firm's expected net income is positive e. None of the above Joe Palooka entered into a forward contract by agreeing to sell 100 ounces of silver at a price of $59.50 per ounce on October 1, 2012. Suppose that the market price of silver is $54.00 per ounce on October 1, 2012. What is Palooka's total gain or loss on the forward contract? a. Total Gain = $5, 950 b. Total Gain = $550 c. Total Loss = -$550 d. Total Loss = -$5, 950 e. None of the above