Suppose Kellogg Cereal has an equity beta of 0.43. If the market risk premium is 5% and the risk free rate is 2%, Kelloggs cost of equity capital is _______. Kelloggs beta being less than 1 implies that the company has _________ risk than the overall market and a __________ threshold for selecting investment projects than a firm with a = 1. Kelloggs beta implies that a one percent increase in the market risk premium, will cause a 0.43% __________ in Kelloggs expected return.

A. 4.15%; less; higher; decrease

B. 3.29%; less; lower; increase

C. 3.29%; less; lower; increase

D. 4.15%; less; lower; increase