Which of the following statements about the 'Financial Leverage' and 'Borrowing to Invest' sections of the lecture material are TRUE:

As long as the expected return on assets is greater than the cost of debt $($interest rates$),$ adding financial leverage to an investment magnifies both expected return on equity and also total risk of that equity.

An investor has a margin loan on an Exchange Traded Fund that tracks the ASX$200$ index. The value of the investment $($asset$)$ is $$100,000$ and they have a $$50,000$ margin loan. If the ASX$200$ were to suddenly fall in value by $30\%,$ that investor would likely experience a margin call.

Neither of the statements are true $($both are false$)$

Only statement $1$ is true

Only statement $2$ is true

Both statements are true $($neither are false$)$

Clear my choice