Financial risk is the risk associated with the use of debt financing. Which of the following statements about financial risk is the most correct?

A. As financial risk increases, the cost of equity stays constant. B. As financial risk increases, so too does the cost of equity. C. Financial risk is the risk that is inherent in a firm's operations. D. Financial risk will affect a firms overall, weighted-average cost of capital in a perfect capital market E. In a perfect capital market, as financial risk increases, so too does the business risk.