Which of the Following Statements Is FALSE

question 13

Multiple Choice

Which of the following statements is FALSE?

• A)If a firm only needs to use the asset for a short time,it is probably less costly to lease it than to buy and resell the asset.
• B)While owners of assets are likely to resell them only if the assets are "lemons," a short-term lease can commit the user of an asset to return it regardless of its quality.In this way,leases can help mitigate the adverse selection problem in the used goods market.
• C)Car dealerships are in a better position to sell a used car at the end of a lease than a consumer is.
• D)If the asset's tax depreciation deductions are faster than its lease payments,there are tax gains from a true tax lease if the lessor is in a lower tax bracket than the lessee.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in the open market.

Common Stock

Common stock represents ownership shares in a corporation, entitling holders to vote at shareholder meetings and receive dividends.

Dividends

Disbursements from a company to its owners, typically representing a share of the earnings.

Short-term Speculation

Financial transactions or investments made with the expectation of significant returns in a short period, often characterized by high risk.