True or False: In general, the more business risk that a firm experienes, the more financial leverage the firm will want to employ in its capital structure.

True or False: When its earnings are decreasing, the use of greater levels of debt capital in a firms capital structure magnifies the negative return earned by the firms shareholders beyond that earned by the shareholders of an otherwise identical unleveraged firm.

True or False: The pretax cost of debt increases as the firms risk of bankruptcy increases.

True or False: An increase in the risk of bankruptcy is likely to reduce the firms free cash flows in the future.

True or False: An increase in debt financing decreases the risk of bankruptcy.