Which of the Following Statements Is CORRECT

Multiple Choice

Which of the following statements is CORRECT?

A) since debt financing is cheaper than equity financing, raising a company's debt ratio will always reduce its wacc.
B) increasing a company's debt ratio will typically reduce the marginal cost of both debt and equity financing. however, this action still may raise the company's wacc.
C) increasing a company's debt ratio will typically increase the marginal cost of both debt and equity financing. however, this action still may lower the company's wacc.
D) since a firm's beta coefficient it not affected by its use of financial leverage, leverage does not affect the cost of equity.
E) since debt financing raises the firm's financial risk, increasing a company's debt ratio will always increase its wacc.