alleryStart learning →How does senior debt differ from junior debt in an LBO?
ASenior is unsecured and dearer than junior
BSenior is secured and cheaper than junior
CBoth kinds are equally unsecured loans
DBoth kinds are really common equity
Answer & Solution
Correct answer: B. Senior is secured and cheaper than junior
Senior debt is secured with the target's assets and carries lower interest, while junior debt has no security and higher interest.
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