Question 41 2 pts Statement 1: The value of the firm is maximized when the WACC is minimized. Statement 2: Financial leverage acts to magnify gains and losses to shareholders. Both statements are false. Statement 1 is false and Statement 2 is true. Statement 1 is true and Statement 2 is false. Both statements are true. Question 42 2 pts refers to the direct and indirect costs associated with going bankrupt or experiencing financial distress. The Static Theory of Capital Structure states that firms borrow up to the point where the tax benefits from an extra dollar of debt are exactly equal to the cost that comes from the increased probability of financial distress. Financial distress costs. Default beta coefficient costs. Flotation costs. O None of the above