Which of the Following Is True

Multiple Choice

Which of the following is true?

A) A firm with low anticipated profit will likely take on a high level of debt.
B) A successful firm will probably take on zero debt.
C) Rational firms raise debt levels when profits are expected to decline.
D) Rational investors are likely to infer a higher firm value from a zero debt level.
E) Investors will generally view an increase in debt as a positive sign for the firm's valuE.