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Basic Question 3 of 19
Deleveraging is the reduction of debt and the opposite of leveraging. The most direct way for an entity to deleverage is to immediately pay off any existing debts and obligations on its balance sheet. In the reading, a company can achieve deleveraging: A. by paying down debt using proceeds from asset selling (liquidating).
B. by the significant rise of its share price.
C. by holding much bad debt to enjoy tax deductibility of interest expense.
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Tamara Schultz
Learning Outcome Statements
explain factors affecting capital structure and the weighted-average cost of capital
CFA® 2025 Level I Curriculum, Volume 2, Module 6.