Answer: Option C
Explanation: In simple words, cost of equity refers to the minimum amount of return that a company have to give to its investors to convince them to invest in the company with the current share price in the market.
It can also be seen as the amount of expected return that investors are willing to get based upon the current level of risk and market conditions.
This rate of return is used by investors in valuing the share of the stock. Investors discount back the expected future inflows to the present value by using this rate as the discounting rate.
It gives the idea of how much an investor should invest today if he or she get the expected dividend in the future.
