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

Question

Quizplus · Accepted Answer

Asset-based lending typically involves the use of the borrower's assets, such as receivables and inventory, as collateral for the loan, which usually provides the lender with a form of short-term security. Longer-term loans, such as those referred to in option D, are more likely to be secured by less liquid assets, such as property, plant, and equipment, rather than the target firm's most liquid assets. This is because more liquid assets are better suited as collateral for shorter-term financing due to their quick convertibility into cash.

Asset Based Lending Is Commonly Used to Finance Leveraged Buyouts