What type of security is used to purchase a target company in a leveraged buy-out?
A) common stock
B) dividends
C) debt
D) retained earnings

Question

Quizplus · Accepted Answer

Leveraged buy-outs typically involve the acquisition of the target company using a significant amount of debt financing, which is secured by the assets of the target company. This allows the acquiring company to use the assets of the target company as collateral to obtain financing, while also potentially reducing the amount of equity required to complete the transaction. Common stock, dividends, and retained earnings are not typically used as security in leveraged buy-outs.

What Type of Security Is Used to Purchase a Target