Which of the Following Is True Regarding Leveraged Buy-Outs (LBOs)

question 31

Multiple Choice

Which of the following is true regarding leveraged buy-outs (LBOs) ?

• A)LBOs involve managers or buyout partners acquiring controlling interests in public companies,usually financed by heavy borrowing.
• B)Concentrated ownership and high levels of debt associated with LBOs are the mechanism for solving the agency problem.
• C)LBOs improve a company's free cash flow and this is the mechanism by which they can solve the agency problem.
• D)LBOs involve managers or buyout partners acquiring controlling interests in public companies (usually financed by heavy borrowing),and concentrated ownership and high levels of debt associated with LBOs are the mechanism for solving the agency problem.

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Definitions:

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A political theory emphasizing the role of the state in the development and maintenance of political power and public policy.