The management of Alkort Corporation forms Bortalk Corporation in which management owns some stock and institutional investors own the rest.Bortalk Corporationissues bonds to institutional investors to raise cash,with which it purchases the assets or stock of Alkort Corporation.The assets of Alkort Corporation are used as security for the bonds.This action by management is best described as a:

Question

Quizplus · Accepted Answer

In a leveraged buyout, a company is acquired using a significant amount of borrowed funds, with the target company's assets often used as collateral. In this scenario, Bortalk Corporation (formed by Alkort Corporation's management and institutional investors) issues bonds to raise cash, which are secured by Alkort's assets, and uses the proceeds to purchase Alkort Corporation. This meets the criteria of a leveraged buyout, where debt financing is used to acquire a company.

The Management of Alkort Corporation Forms Bortalk Corporation in Which