According to the pecking order hypothesis for capital structure:

Select one:

a. firms with low past profitability will not have much debt in their capital structures

b. firms will seek to minimize the indirect costs of financial distress

c. firms prefer external over internal financing in order to send optimal signals to investors in order to maximize the value of the firm

d. a firm's capital structure reflects the cumulative need for the firm to issue funds externally when the firm's retained earnings were not sufficient to fund investment opportunities and issuing debt is their first choice for external funds

e. a firm's optimal debt-equity mix results when the direct costs of bankruptcy exactly offset the present value of the interest tax deduction