QUESTION 32 In the trade-off theory, debt levels chosen to balance interest tax shield against the costs of financial distress imply an interior optimum (firm value maximizing) debt ratio that investors are irrational, since they require lower returns the hgher the risk that a firm would use little to no debt that a firm would borrow as much as possible QUESTION 33 A near-rational result means that small deviations above or below the optimal debt ratio (D/A*) will not change the firm value much because the firm value function is nearly flat at the maximum. True False