LEVERAGED BUYOUT - LBO
Takeover or controlling interest of a company, using a significant amount of borrowed money, either bonds or loans, to meet the acquisition cost. Oftentimes, the assets of the company serve as collateral for the loans aside from the assets of the acquiring company. It lets the firms to create huge acquisitions without committing to a lot of capital. LBO has a usual ratio of 90% debt to 10% equity but because of the debt/equity ratio, these are not considered investment grade and referred to as junk bonds.
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Affirmative Covenant
A kind of contract or promise that requires a party to conduct some action. For example, a bond covenant which provides that the issuer must delive ...
Pure Risk
A risk where loss is the only potential outcome; there is no positive result. A pure risk is related to events that are out of control of the risk- ...
Efficiency
Performance level describing a process which uses the lowest amount of inputs to come up with the greatest amount of inputs. It is relative to usin ...
Tax Free
Goods and/or financial products that are not taxable. Having the tax free status allows an entity to save money and encourages additional spending ...
Reprice
A situation that is most often allowed for company executives or high-level employees. It permits them to trade in their options that out of the mo ...
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