A leveraged buyout (LBO) is characterized by:

A All-equity financing

B Using significant amounts of borrowed money to acquire a company

C Government funding

D Using only retained earnings

✓ Correct Answer: Option B

An LBO acquires a company primarily using debt, with the acquired companys assets often serving as collateral.

💡 Why is B) the correct answer?

The correct answer to the question "A leveraged buyout (LBO) is characterized by:" is Option B: Using significant amounts of borrowed money to acquire a company.

The other options — A) All-equity financing, C) Government funding, D) Using only retained earnings — are incorrect for this CFA Exam Prep question. As explained above: An LBO acquires a company primarily using debt, with the acquired companys assets often serving as collateral.

📚 About This CFA Exam Prep Practice Question

This 2-level CFA Exam Prep question from the Corporate Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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A leveraged buyout (LBO) is characterized by:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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