Question: 1. Leverage involves using fixed costs to magnify the potential return to a firm. Explain the hedging (maturity matching) approach to financing.(3 MARKS) 2. Illustrate

1. Leverage involves using fixed costs to magnify the potential return to a firm. Explain the hedging (maturity matching) approach to financing.(3 MARKS)

2. Illustrate the relationship between profitability, liquidity, and risk in the management of working capital.(3 MARKS)

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