A popular financial strategy in which a company is acquired in a transaction financed largely by debt ∙ eventually paid off with money generated from the acquired company's operations or by sale of its assets is
A)illegal in most countries.
B)a good way to build a core competency.
C)an application of the capital asset pricing model.
D)the leveraged buyout.
E)an example of internal financing.

Question

Quizplus · Accepted Answer

The described financial strategy is known as a leveraged buyout, which involves acquiring a company through debt financing that is repaid using the acquired company's cash flows or asset sales. It is a commonly used strategy for private equity firms and can be controversial because of the potential risks and consequences for both the acquiring company and the target company.

A Popular Financial Strategy in Which a Company Is Acquired