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.
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.
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