In a leveraged buy-out,a firm greatly increases its debt level by issuing junk bonds to finance the purchase of another firm's stock.

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In a leveraged buy-out, a firm typically increases its debt level to finance the purchase of another firm's stock. This may involve issuing junk bonds, which are high-risk, high-yield bonds. However, the use of junk bonds is not always necessary, and other financing methods may also be employed.

In a Leveraged Buy-Out,a Firm Greatly Increases Its Debt Level