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BAN2601 ASSIGNMENT 2 SEMESTER 1 - 2022
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- University Of South Africa
BAN2601 ASSIGNMENT 2 SEMESTER 1 - 2022
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BAN2601ASSIGNMENT 2
SEMESTER 1 - 2022
, 1. The acquisition of a public or private company that is financed largely by
debt is referred to as a ________
A. debt acquisition.
B. leveraged buyout.
C. junk bond.
D. junk takeover.
A leveraged buyout (LBO) is the acquisition of another company using a significant
amount of borrowed money (debt) to meet the cost of acquisition. The assets of the
company being acquired are often used as collateral for the loans, along with the assets
of the acquiring company.
In a leveraged buyout (LBO), there is usually a ratio of 90% debt to 10% equity.
2
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