In a Leveraged Buy Out (LBO)the leverage is usually collateralized by:
A)there is no collateral, that's why it's "leveraged."
B)the firm's assets.
C)the new owner's personal assets.
D)stockholder's equity.

Question

Quizplus · Accepted Answer

In a Leveraged Buy Out (LBO), the leverage is usually collateralized by the firm's assets. This means that the borrowing is secured by the assets of the company being acquired, such as property, inventory, and equipment. This provides some security for the lenders in case the company is unable to pay back the debt. It is important to note that while the assets serve as collateral, the debt is still considered "leveraged" because it is a high level of debt to equity.

In a Leveraged Buy Out (LBO)the Leverage Is Usually Collateralized