Which of the Following Statements Is Most CORRECT

question 10

Multiple Choice

Which of the following statements is most CORRECT?

• A) Leveraged buyouts (LBOs)occur when a firm issues equity and uses the proceeds to take a firm public.
• B) In a typical LBO,bondholders do well but shareholders see their value decline.
• C) Firms are forbidden by law to sell any assets during the first five years following a leverage buyout.
• D) Not all target firms are acquired by publicly traded corporations.In recent years,an increasing number of firms have been acquired by private equity firms.Private equity firms raise capital from wealthy individuals and look for opportunities to make profitable investments.
• E) In an LBO sometimes the acquiring group plans to run the acquired company for a number of years,boost its sales and profits,and then take it public again as a stronger company.In other instances,the LBO firm plans to sell off divisions to other firms that can gain synergies.In either case,the acquiring group expects to make a substantial profit from the LBO,but the inherent risks are small due to the heavy use of venture capital and very little debt.

---

Definitions:

Daily Task List

A list or agenda created to manage and organize daily duties, tasks, or goals.

Weekly Calendar

An organizational tool that displays the days of the week within a specific time frame, aiding in planning and scheduling.

Seven-day

Referring to a period or cycle of seven consecutive days, commonly used in planning and scheduling contexts.

Natural Language

Natural Language is the human language, such as English or Spanish, that is used for daily communication, contrasting with programming languages designed for computer interaction.