Which one of the following statements is correct?

Select one:

a. Preference shares are generally the cheapest source of capital for a firm.

b. An increase in the market value of preference shares will increase a firm's weighted average cost of capital.

c. Preference shares are valued using the capital asset pricing model.

d. The cost of preference shares is unaffected by the issuer's tax rate.

e. The cost of preference shares remains constant from year to year.