A Lease That Transfers Substantially All the Risks and Rewards

question 15

Multiple Choice

A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is known as a/an:

• A)finance lease
• B)operating lease
• C)current lease
• D)non- current lease

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Definitions:

Conversion Value

The monetary value of a convertible security (such as a convertible bond) if it were converted into a predetermined number of shares of common stock, generally at the discretion of the holder.

Par Value

The face value of a bond or stock, as stated on the certificate, which is the minimum stated value.

Convertible Debentures

Bonds that can be converted into a predetermined amount of the issuing company's equity at certain times during their life, usually at the discretion of the bondholder.

Conversion Price

The predetermined price at which convertible security, such as a bond or preferred stock, can be converted into a specified number of shares of common stock.