Private Equity Funds Tend to Use Mostly _________ When Acquiring

question 58

Multiple Choice

Private equity funds tend to use mostly _________ when acquiring stakes in businesses.

• A)their equity from issuing common stock
• B)their equity from retaining earnings
• C)their equity from issuing preferred stock
• D)borrowed funds

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Definitions:

Tax

A required financial contribution or alternative type of tax placed on a taxpayer by a state authority to cover government outlays and assorted public spending.

Social Security Tax

A tax levied on both employers and employees to fund the Social Security program, which provides benefits to retirees, the disabled, and children of deceased workers.

Labor Tax

Taxes levied on the wages and income generated from labor, which can affect employment and labor supply decisions in the economy.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved.