If the Lease Payments Are Sufficient to Fully Cover the Lessor's

question 43

True/False

If the lease payments are sufficient to fully cover the lessor's cost of purchasing the asset, then this scenario represents a characteristic of an operating lease.

---

Definitions:

Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price within a certain period.

Exercise Value

The value of an option if it were exercised immediately, typically the difference between the underlying asset's market price and the option's strike price.

Time Value

The concept that money available in the present is worth more than the same amount in the future due to its potential earning capacity.

Market Value

The ongoing price for buying or selling a service or asset on the open market.