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✨ EY Prep 🩷
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Private Equity
🔴 Hard
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What is an LBO and why does leverage amplify equity returns?
A.
LBO = Listed Business Offering; leverage reduces risk by spreading it across creditors
B.
LBO = Leveraged Buyout; using debt means the equity invested is smaller, so the same EV gain produces a proportionally higher return on equity
C.
LBO = Leveraged Bond Offering; leverage amplifies interest income
D.
LBO = Long-term Business Ownership; holding longer amplifies returns