Quincy Owns a Metal Fabricating Company

question 13

Multiple Choice

Quincy owns a metal fabricating company.He is desperately in need of working capital in order to carry out several large orders.Therefore he sells his heavy stamping equipment to Beneficial Leasing Inc.in a five-year purchase lease plan.This arrangement amounts to

• A)a sale and leaseback.
• B)an operating lease.
• C)the mortgaging of assets.
• D)the ducktail plan.
• E)one of the highest costs in asset financing.

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Definitions:

Risk-free Rates

The theoretical return on an investment with no risk of financial loss, often represented by the yield on government securities like U.S. Treasury bonds.

Spot Exchange Rate

The ongoing market rate for the prompt conversion of one currency into another.

Futures Price

The agreed price for the underlying asset in a futures contract to be paid on the contract's settlement date.

Portfolio's Beta

A measurement of a stock portfolio's volatility compared to the market as a whole.