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      Question

      A hybrid of debt and equity financing that gives the

      lender the rights to convert to an ownership or equity interest in the company in case of default is called?
      A Mixed financing Correct Answer Incorrect Answer
      B Hybrid financing Correct Answer Incorrect Answer
      C Mezzanine financing Correct Answer Incorrect Answer
      D Exchange financing Correct Answer Incorrect Answer
      E Sandwich financing Correct Answer Incorrect Answer

      Solution

      Mezzanine financing is a hybrid of debt and equity financing that gives the lender the rights to convert to an ownership or equity interest in the company in case of default, after venture capital companies and other senior lenders are paid. Mezzanine financing, usually completed with little due diligence on the part of the lender and little or no collateral on the part of the borrower, is treated like equity on a company's balance sheet.

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