1. Private-equity investment funds are organized as

C-corporations.

sole proprietorships.

partnerships.

nonprofit corporations.

2. The simplest way to divest an asset is to

spin it off.

carve it out.

sell it.

All of these methods are equally complex.

3. Junk bonds are bonds that

have ratings above investment grade.

have ratings below investment grade.

are used only for leveraged buyouts.

are used only for management buyouts.

4. Leveraged restructurings are designed to force mature, successful, but overweight firms to

reduce cash.

reduce operating costs.

use assets more efficiently.

all of these options are correct.

5. The following are examples of LBOs EXCEPT:

KKR and RJR Nabisco.

Motorola and Motorola Mobility.

JAB and Keurig Green Mountain.

Carlyle Group and Veritas.

6. The following are important motives for privatization EXCEPT:

revenue for the government.

increased efficiency.

share ownership.

economies of scale.

7. Most privatizations resemble

spin-offs.

carve-outs.

LBOs.

both spin-offs and carve-outs.