Which of the Following Is True of a Firm's Capital

Which of the following is true of a firm's capital structure and its value?

A) An increase in a firm's debt ratio is considered a favourable signal because it indicates that managers believe the firm will be generating taxable earnings in the future.
B) Under all circumstances,an increase in a firm's debt ratio is considered an unfavourable signal because it indicates that they are overly concerned about their short-term liquidity.
C) Though managers understand that their firm's share price is likely to respond favourably to higher leverage ratios,they do not have an incentive to choose higher leverage.
D) An advantage for unlevered firms over levered firms is that any critical business decision is perceived as a favourable signal.