Which of the following statements regarding the cost of equi

Which of the following statements regarding the cost of equity is most correct?

A	The cost of debt is the interest rate set on debt financing, while the cost of equity is defined similarly; it is the rate of return required by equity investors.

Cost of equity also referred as required return for common stockholders. It is based on the riskiness of the firm.

Under debt risk premium method, cost of debt is added with appropriate premium to arrive at cost of capital.

Hence, correct option is (D) Both a. and b. are correct.