3. This question focuses on debt, preferred stock, common stock and retained earnings. Make sure that you provide a complete explanation regarding common stock compared to retained earnings. If we construct a graph that has the cost of capital on the vertical axis and the risk ofthe firm on the horizontal axis, what does the graph look like? Explain. (12 points). 3. This question focuses on debt, preferred stock, common stock and retained earnings. Make sure that you provide a complete explanation regarding common stock compared to retained earnings. If we construct a graph that has the cost of capital on the vertical axis and the risk ofthe firm on the horizontal axis, what does the graph look like? Explain. (12 points)