Series 79 practice questioneasyLeveraged Buyouts
In a typical LBO, which source of financing is most likely to make up the largest portion of the total capital structure?
- ASenior debt✓ Correct answer
- BCommon equity
- CPreferred equity
- DMezzanine debt
Explanation
Why A — Senior debt
Senior debt usually makes up the largest component in an LBO. Trap answers confuse equity or subordinate debt, which are smaller portions.
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