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Private Equity

Lecture 5-6: Deal Structuring (Financing)

Comprehensive exam-prep quiz covering leveraged finance: sources and uses of funds, management incentives and equity structuring, the leverage effect on EV and equity, key factors determining leverage, LBO debt structures, loan underwriting options, and loan agreements.

Question 15 of 50

Compared with subordinated loans, a key disadvantage of using preferred shares as a fixed return instrument is that:

Pick one: press 1-4 on your keyboard or click an option.
A

They are always more senior than senior debt

B

They cannot pay any yield at all

C

Their yield (dividends) is not tax-deductible

D

They rank behind ordinary shares