If a Company's Bonds Bear an Interest Rate of 8%,the

Multiple Choice

If a company's bonds bear an interest rate of 8%,the tax rate is 30%,and the company's assets are generating an after-tax return of 7%,then the leverage would be:

A) positive.
B) negative.
C) neither positive nor negative.
D) impossible to determine without knowing the return on common shareholders' equity.