A company starts with $1 billion in assets, $400 million in owners' equity & $600 million in debt. It draws down $100 million from its bank credit line and uses the funds to purchase its own shares in the stock market. What does this do to the balance sheet?

a) increases book value
b) decreases book value
c) increases leverage ratio
d) decreases leverage ratio
e) increases assets
f) decreases assets
g) increases market value
h) deceases market value

Answer:
b) decreases book value
c) increases leverage ratio