Equity Investments Q147

147Which of the following is most likely true for a leveraged buyout (LBO)?

A
A company uses debt to buy back its shares.
B
The management of a firm uses its own equity to purchase the common shares of a public company.
C
A group of investors uses a large amount of debt to buy all outstanding common shares of public company.

Option : C
Explanation : This is the correct definition of a leveraged buyout (LBO), which is covered in more detail in Alternative Investments.

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