Investors consider fee income, in contrast to the net interest income a bank receives from its assets less what it pays for its liabilities, to be:

a) less risky. Hence, the greater percentage of fees in a banks earnings, the lower the discount rate investors apply to the its stocks cash flows.

b) more risky. Hence, the greater percentage of fees in a banks earnings, the lower the discount rate investors apply to the its stocks cash flows.

c) less risky. Hence, the greater percentage of fees in a banks earnings, the higher the discount rate investors apply to the its stocks cash flows.

d) more risky. Hence, the greater percentage of fees in a banks earnings, the higher the discount rate investors apply to the its stocks cash flows.