Under M&M with corporate taxes Theory, Which of the following statements is most correct?

Question 2 options:

A Since debt financing raises the firm's financial risk, raising a company's debt ratio will always increase the company's WACC.

B Even when debt financing is more expensive than equity financing, raising a company's debt ratio will always reduce the company's WACC.

C Increasing a company's debt ratio will typically reduce the marginal cost of both debt and equity financing; however, it still may raise the company's WACC.

D Statements a and c are correct.

E. None of the statements above is correct.