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

Multiple Choice

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

A) Positive.
B) Negative.
C) Neither positive nor negative.
D) Impossible to determine without knowing the return on common shareholders' equity.