As recession looming ABC Corp's weighted average cost of capital increases. Which one of the following statements is consistent with this context:

I. ABC Corp's cost of capital increased because recession expectations increased is default risk premium

II$.$ ABC corp's cost of capital increased because recession expectations increased risk aversion

III. ABC corp's cost of capital increased becuse recession expectations increased risk free rate of return

IV$.$ABC Corp's cost of debt increased despite a decline in inflation expectations

V$.$ ABC Corp's cost of equity increased because of a decline in its systematic risk