Which of the Following Statements Best Describes a Bootstrap Acquisition

question 63

Multiple Choice

Which of the following statements best describes a bootstrap acquisition?

• A) The shareholder sells his stock in exchange for cash and debt.
• B) The shareholder sells part of his or her stock to a purchaser and then the corporation redeems the original shareholder's remaining stock.
• C) The shareholder exchanges his stock for stock of a different corporation.
• D) none of the above

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Definitions:

Credit Terms

The conditions under which credit is extended by a lender to a borrower, including repayment timing, interest rate, and other stipulations.

Carrying Cost

The total cost of holding inventory, including storage, insurance, and taxes.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Cost

Costs that vary directly with the level of production or sales volume.