A Leveraged Buyout Refers To

question 29

Multiple Choice

A leveraged buyout refers to:

• A)one firm issues stock to take over another firm.
• B)one firm trades its stock for the stock of another firm.
• C)a firm goes heavily into debt in order to obtain the funds to purchase the shares of the public stockholders and thus take the firm private.
• D)one firm pays cash for the shares of a takeover firm's shares.

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Definitions:

Business Risk

The exposure a company or investor has due to uncertainties in the operating environment, including market demand, supply costs, and competition.

Financial Risk

The probability of loss inherent in financial operations, such as changes in market prices, interest rates, or credit quality.

Break Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain from business activities.

Authors' Royalties

Authors' royalties are payments made to authors from publishers or producers, based on a percentage of sales of their work.