Economics · Corporate Restructuring
Given below are two statements: Assertion (A): If the acquired company has a high degree of business risk, a Leveraged Buyout (LBO) is not considered a suitable form of corporate restructuring for that company. Reason (R): LBOs result in an increase in financial risk, and a company with high business risk should maintain low financial risk to keep its total risk within reasonable limits. Choose the correct option:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1(A) is false, but (R) is true.
- 2(A) is true, but (R) is false.
- 3Both (A) and (R) are true, but (R) is not the correct explanation of (A).
- 4Both (A) and (R) are true and (R) is the correct explanation of (A).✓
Correct answer
Both (A) and (R) are true and (R) is the correct explanation of (A).
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