To purchase two electronic retailers,SoundTrak Inc.borrows $40 million from banks and raised $8 million through preferred stock.After the deal closes,SoundTrak Inc.uses $20 million of cash and assets from one of the acquired retailer to clear $25 million of the bank loan.This is an example of

A) trade credit.
B) leveraged buyout.
C) angel capitalism.
D) venture capitalism.

Leveraged Buyout

Acquiring a company using a significant amount of borrowed money (leverage) to meet the cost of acquisition, often using the assets of the company being acquired as collateral.

Trade Credit

A financial arrangement where a buyer is allowed to purchase goods or services and pay the supplier at a later date.

Angel Capitalism

The act of individual investors providing capital for start-up companies in exchange for ownership equity or convertible debt.