debt

问题如下：

Q. In contrast to direct lending and distressed debt, mezzanine debt most likely requires higher interest rates for its investors due to its:

选项：

A.reliance on leverage. B.overall ranking and status in company debt structure. C.need for management involvement over an extended time.

解释：

B is correct. Because of its typically junior ranking and its usually unsecured status, mezzanine debt is riskier than senior secured debt. To compensate investors for this heightened risk, investors commonly demand higher interest rates. A is incorrect because leverage is typically a feature of a form of direct lending in which firms may also provide debt in the form of a leveraged loan, a loan that is itself levered with borrowing costs figuring into returns. C is incorrect because operational involvement over a possibly lengthy time with unpredictable risks describes the role of turnaround investors involved with distressed debt.