Consider the following two potential transactions: (i) selling off some financial assets; and (ii) immediately using the cash proceeds to buy back some of outstanding common stocks (i.e., a stock repurchase). Assume this is an NFO firm (i.e., financial obligations > financial assets). The combination of two financial transactions will A. B. C. D. reduce the financial leverage (FLEV) and the firm will continue to be an NFO firm. reduce the financial leverage (FLEV) and the firm will switch to an NFA firm. increase the financial leverage (FLEV) and the firm will continue to be an NFO firm. increase the financial leverage (FLEV) and the firm will switch to an NFA firm.
