You are in a board room meeting for the tech company Cloud Co. that specializes in cloud storage and the discussion entails the amount of debt the firm should have in it's capital structure. You hear some of the board members, some of who do not have a lot of direct financial experience talking to one another. The CFO and controller are there do given input and you are tasked with summing up the meeting notes and having a follow up discussion with the CFO. Here is what you hear and how you think the response should be: 1. Another board member states that the cost of equity is the most expensive part of the capital structure of Cloud Co. The rest of the board agrees and you hear some other talk, some of which you try to decipher. Which answer do you think is most accurate, a. Common equity is most expensive because it gets paid off after bonds and hence riskier. b. Common equity holders own the firm which entitles them to distributions of profits, so other providers of capital are giving up this advantage. c. Common equity holders have unlimited upside in return potential whereas bonds do not. d. The cost of equity to the firm is the required return to the equity investor. As such, all of the above are essentially true. e. All of the above