Which One of the Following Is True

Multiple Choice

Which one of the following is true?

A) A firm with low anticipated profits will likely take on a high level of debt.
B) Investors will generally view an increase in leverage as a positive sign of the firm's value.
C) Rational investors are likely to infer a higher firm value if a firm is all-equity financed.
D) Rational firms raise debt levels when profits are expected to decline.
E) High-growth firms with future positive net present value projects tend to have high levels of debt.