Question 5 (5 points) When a firm's business risk increases, its financial risk also increases because the firm's capital structure is the key determinant for both business risk and financial risk. (True/False) True False Question 6 (5 points) Giovanni Bakery has a capital structure of 40% debt and 60% equity, its tax rate is 35%, and its unlevered beta, bu, (if the firm had no debt) is 0.90. The risk-free rate is 3.0%, and the market risk premium is 6.0%. The firm has issued no preferred stock. What would be Giovanni's WACC? Assume the firm's cost of debt, rd, is 6.0%. (Hint: First, calculate the levered beta using the Hamada equation. Second, compute rs using the CAPM. Then, use the WACC formula to calculate the firm's WACC.) (Multiple Choice) 8.00% 4.22% 6.81% 8.62% 5.46%