Asset Based Lending Is Commonly Used to Finance Leveraged Buyouts

question 28

Multiple Choice

Asset based lending is commonly used to finance leveraged buyouts. Which of the following is not true about such financing?

• A) The borrower generally pledges tangible assets as collateral.
• B) Lenders look at the target firm's assets as their primary protection.
• C) Bank loans are secured frequently by receivables and inventory.
• D) Loans maturing in more than one year are often referred to as term loans.
• E) The target firm's most liquid assets generally secure longer-term loans.

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Definitions:

Damages

Monetary compensation awarded by a court for loss or injury caused by the unlawful act or negligence of another.

Deductible

An amount that a policyholder must pay out of pocket before an insurance provider will cover any expenses.

Insured

An individual or entity covered by an insurance policy, receiving financial protection or reimbursement against losses from an insurer.

Loss

The state or condition of not having something anymore, often referring to the disadvantage suffered following a particular event or action.