Which one of the following statements is correct?

Select one:

a. The cost of preferred stock remains constant from year to year.

b. Preferred stock is generally the cheapest source of capital for a firm.

c. Preferred stock is valued using the SML or security market line model.

d. An increase in the market value of preferred stock will increase a firm's weighted average cost of capital.

e. The cost of preferred stock is unaffected by the issuer's tax rate.