Which of the following two statements is correct? S1: Holding all else constant, the financial risk of a firm increases as the firm becomes less leveraged.

S2: The capital structure of the firm is affected by the business risk of the firm. Holding all else constant, the more business risk a firm has, the less debt it can carry in its capital structure.

Group of answer choices

S1 is correct but S2 is false

Both statements are correct

S2 is correct but S1 is false

Both statements are false