Question 6) A feature in the high yield market that allows the issuer to pay interest in the form of additional notes is called a:

		a. Bridge loan
		b. First lien
		c. PIK
		d. Term B loan

Question 7) What is the annual interest rate paid on a debt obligation s principal amount outstanding called?

		a. Covenant
		b. Coupon
		c. Call premium
		d. PIK

Question 8) When performing a returns analysis in an LBO, which method does not include the time value of money?

		a. IRR
		b. DCF
		c. Cash return analysis
		d. Perpetuity growth method

Question 9) If an LBO target does not repay any debt during the investment horizon, how can the sponsor still realize a return?

		a. If the target reinvests its cash into the business, the sponsor can realize a return by selling the target at a higher enterprise multiple.
		b. The sponsor cannot realize a return, as the enterprise value did not increase.
		c. The sponsor cannot realize a return, as the value of the sponsor s equity could not increase.
		d. It depends on the sponsor s internal rate of return.