Which One of the Following Is True

question 35

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.