- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 47. Introduction to Alternative Investments
- Subject 5. Private Capital
CFA Practice Question
In a typical leveraged buyout deal, which component often provides the largest amount of capital?
A. Equity.
B. Bank loans.
C. High yield bonds.
Explanation: Bank loans (leveraged loans) often provide more capital than either equity or high yield bonds. They tend to be higher on the capital structure than high yield bonds, meaning that in the event of default leveraged loans will pay out before HY Debt.
User Contributed Comments 2
| User | Comment |
|---|---|
| tylaw | Um...this might only be true in CFA land. |
| jnptrsn1 | CFA land XDD |