You are the manager of Bluecorp, a publicly listed company. You plan to raise $10 million to support your investment projects (7 marks). (a) One shareholder who holds more than 5% of the shares asked you to get the $10 million by borrowing from a bank. Explain why the large shareholder asked you to borrow from the perspective of the free cash flow hypothesis. (3 marks) (b) Suppose you decide to raise $10 million through a seasoned equity offering (SEO). According to the research findings provided by our textbook, do you expect the stock price of Bluecorp to increase or decrease after the announcement of the SEO? Explain the change of stock prices from the perspective of adverse selection. (4 marks)