FRM Financial Risk Manager Practice Test

Category - Terms and concepts

True or false: Leveraged buyouts (LBOs) are not collateralized.
  1. True
  2. False
Explanation
In LBOs, the assets of the company being acquired typically serve as collateral, in addition to possible assets of the acquiring company.

Key Takeaway: These are highly risky transactions, and it's rare they would be done without collateral.
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