Leveraged buyouts (LBOs)are used by existing corporate bondholders to increase the rate of return earned on their bonds.

Question

Quizplus · Accepted Answer

Leveraged buyouts (LBOs) involve the acquisition of a company using a large amount of borrowed money or debt. This debt is typically obtained from various sources such as banks, private equity firms, and other investors. The purpose of an LBO is to use the acquired company's assets and cash flows to repay the debt used to finance the acquisition. Existing corporate bondholders may be affected by an LBO, but they are not the ones using the LBO to increase their rate of return on their bonds.

Leveraged Buyouts (LBOs)are Used by Existing Corporate Bondholders to Increase