3. A regional bakery is forecasting a major purchase of flour and is considering the use of a cash flow hedge. Explain how a cash flow hedge affects operating income currently and in the future as...

3. A regional bakery is forecasting a major purchase of flour and is considering the use of a cash flow hedge. Explain how a cash flow hedge affects operating income currently and in the future as well as how such amounts are calculated.

4. Why might an option be preferred over a futures contract?

5. Using an example, explain how an interest swap works.