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Assuming that the Return on Asset of a company is less than its average interest rate paid on debt, what effect would an increasing leverage

Assuming that the Return on Asset of a company is less than its average interest rate paid on debt, what effect would an increasing leverage have on the companys ROE?

Positive effect (ROE increases with increasing leverage)

No effect (ROE remains unchanged with increasing leverage)

Negative effect (ROE decreases with increasing leverage)

Which answer is correct?

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