LBO Model Quiz Advanced

LBO Model Quiz Advanced All of the following types of debt are typically "floating-rate" instruments used to finance an LBO EXCEPT: a. Subordinated Notes b. Term Loan A c. Term Loan B d. Revolver e. None of the above - ANSWER ️️ Explanation: The correct answer choice is A. All of the answer choices listed above with the exception of A are floating-rate debt instruments, meaning that its interest rate is not fixed (e.g. 8% each year until maturity) but rather tied to something like LIBOR (e.g. LIBOR + 3%). Both Term Loans and Revolvers have interest rates that fluctuate, whereas subordinated notes - also referred to as high-yield debt - have fixed interest rates that do not change over time. Which of the answer choices below lists the tranches of LBO debt from Lowest to Highest in terms of typical interest rates? a. Term Loan B; Term Loan A; Revolver; Senior Notes; Subordinated Notes; Mezzanine b. Revolver; Senior Notes; Subordinated Notes; Term Loan A; Term Loan B; Mezzanine c. Revolver; Term Loan A; Term Loan B; Senior Notes;