Assume a firm has a debt$-$equity ratio of $\mathrm{.}36.$ The firm's cost of equity:

Multiple Choice

tends to remain static even as the company's level of risk increases.

increases as the unsystematic risk of the company's stock increases.

is affected by both a change in the firm's beta and the firm's projected rate of growth.

equals the risk$-$free rate plus the market risk premium.

equals the company's pretax weighted average cost of capital.