An Incentive

question 129

Multiple Choice

An incentive

• A) could be a reward but could not be a penalty.
• B) could be a penalty but could not be a reward.
• C) could be either a reward or a penalty.
• D) is the opposite of a tradeoff.

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Definitions:

Unamortized Discount

The portion of a bond's issue price that is below its face value and has not yet been expensed as interest over the life of the bond.

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, including the cost of servicing or carrying debt.

Bargain Purchase Option

A lease agreement term allowing the lessee to purchase the leased asset at the end of the lease term for a price significantly lower than its expected fair market value.

Lease Contract

A legal agreement in which one party permits another to use property, equipment, or facilities for a specified period in exchange for payment.