CFA text capital structure EOC #16

CFA Level II
#1

Could anybody help me understand how they were able to make the conclusion that operating leveage would be lower for Bema vs. Aquarius?

I thought that since after the share repurchase announcement, and Bema’s market value declines, this would increase the business risk/operating leverage of the company.

#2

They are choosing answer B as the one to be least consistent with White’s conclusions. Your reasoning is spot on (although there might be an argument to be made that the increased risk leads to the reduced market value and not vice versa).