CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

The LBO model is a:

I. Valuation model.
II. Negotiation tool.
III. Acquisition model.
Correct Answer: II

User Contributed Comments 4

User Comment
vi2009 A LBO model is a valuation model! was what I thought ... but read Curriculum p 54 and this explains why it is a negotiation tool!
CarsonBJ P. 59 paragraph 3 states "On the basis of the input parameters, the LBO model provides the maximum price that can be paid to the seller while satisfying the target returns for the providors of financing. This is why the LBO model is not a valuation methodology per se. It is a valuation tool that helps develop a range of acceptable prices to conclude the transaction."
Allen88 Thanks CarsonBJ
sogah its page 58 paragraph 3
You need to log in first to add your comment.