for Q8, I have different opinion, if pension asset increase equity investment from 0% to 80% equity, assuming pension asset equity beta don’t change (0.75), when equity in pension asset increase, total pension asset beta increases. we increase the equity and reduce debt, so total asset beta increase, since both total asset beta and pension asset beta increase, the answer says wacc will go up is wrong. wacc still the same.
for example, if operating asset beta didn’t change, equity in pension asset goes from 80% to 90%, the total asset Beta (both operating asset and pension asset) will increase because equity increase and debt reduce. but WACC is based on core operating asset beta not total asset beta. so wacc still the same