Which of the following statements is most correct?

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

Since debt financing is cheaper than equity financing, raising a companys debt ratio will always reduce the companys WACC.

Increasing a companys debt ratio will typically reduce the marginal cost of both debt and equity financing; however, it still may raise the companys WACC

Statements a and c are correct.

None of the statements above is correct.