Once the LBO Has Been Consummated,the Firm's Perceived Ability to Meet

True/False

Once the LBO has been consummated,the firm's perceived ability to meet its obligations to current debt and preferred stockholders often deteriorates because the firm takes on a substantial amount of new debt.The firm's pre-LBO debt and preferred stock may be revalued in the market by investors to reflect this higher perceived risk,resulting in a significant reduction in the market value of both debt and preferred equity owned by pre-LBO investors.