The cost of debt for a firm:

A) Can be observed directly even if the firm's bonds are not publicly traded.

B) Is calculated by estimating the change in the firms equity and then using the SML.

C) Is estimated by finding the yield on previously issued bonds with lower bond ratings.

D) Is calculated by looking at the coupon rates on existing bonds of similar risk.

E) Is the return that lenders require on the firm's debt.