Step 1: Recall the handicap principle.
The handicap principle (Zahavi, 1975) suggests that costly traits/signals evolve because they act as honest indicators of male quality. Only high-quality males can afford to produce and maintain these costly traits.
Step 2: Evaluate each option.
(A) \emph{Females prefer costly signals.}
Yes — under sexual selection, females are predicted to prefer costly traits because they are harder to fake and thus reflect male fitness.
(B) \emph{Honest signals are costly to produce.}
Yes — costliness is the mechanism ensuring honesty; if signals were cheap, low-quality males could also produce them, making them unreliable.
(C) \emph{Males displaying costly signals are not chosen by females.}
Incorrect — the principle argues the opposite: costly signals \emph{increase} mating success because females prefer them.
(D) \emph{Costly signals are reliable indicators of signaller quality.}
Yes — this is the central assumption. Cost ensures reliability: only strong males can bear the handicap.
Step 3: Combine.
Hence, the assumptions/predictions are (A), (B), and (D).
Final Answer:
\[
\boxed{(A), (B), \text{ and } (D)}
\]