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