Which of the following statements about the cost of capital is CORRECT ?

Select one:

a.The WACC of a firm will decrease when investors become more risk averse.

b.Both the cost of debt and equity financing will decrease when a nuclear plant company encounters a ban on nuclear power generation in certain states.

c.An increase in the risk-free rate is likely to increase the marginal costs of both debt and equity financing.

d.Both the cost of debt and equity financing will decrease when a firm increases its debt/asset ratio.

e.Both the cost of debt and equity financing will decrease when the Federal Reserve tightens credit.