Which of the following statements is/are correct?

1 An increase in the cost of equity leads to a fall in share price
2 Investors faced with increased risk will expect increased return as compensation
3 The cost of debt is usually lower than the cost of preference shares

A. 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2 and 3