Detailed Answer please

(xxv) Ferguson-Fairbairn Inc.'s finance is a mixture of debt and equity, with 100m ordinary shares in issue trading at $6.70 per share and bonds in issue of $300m trading at 94%. The company has an equity beta of 1.2 and a pre-tax cost of debt of 6%. The current risk-free rate of retum is 4%, the current equity risk premium is 5% and Ferguson-Fairbair Inc. pays corporate tax at 25%. What is Ferguson-Fairbaim Ir's WACC (to one decimal place)? A 8.88% 9.03% 8.37% B (xxvi) The CAPM provides a framework to determine: 1. The required rate of return on an asset; 2. Indicate the relationship between risk and return of the asset 3. That all investors have homogenous bellefs conceming the distribution of security returns. A 1 and 2 B 1 and 3 C 2 and 3 (xxvii) A recession is an economic event that is best characterized as: A Unsystematic risk that can be diversified away. Systematic risk. C Market risk that can be diversified away. BUDE [2 marks] Unsystematic risk that cannot be diversified away Both b and c [1 mark] [1 mark] Page 10 of 17