A Radio Story Reported a Study on the Makes and Models

question 352

Multiple Choice

A radio story reported a study on the makes and models of cars that were observed going through intersections in the Washington, D.C. area without stopping at the stop signs. According to the story, Volvos were heavily overrepresented; the fraction of cars running stop signs that were Volvos was much greater than the fraction of Volvos in the total population of cars in the D.C. area. This is initially surprising because Volvo has built a reputation as an especially safe car that appeals to sensible, safety-conscious drivers. How is this observation best explained?

• A)Volvo drivers are not willing to take risks that they would take in another, less safe car. Driving a Volvo leads to a propensity to run stop signs.
• B)Volvo drivers are not willing to take risks that they would take in another, less safe car. Driving a Volvo reduces the propensity to run stop signs.
• C)Volvo drivers are willing to take risks that they would not take in another, less safe car. Driving a Volvo reduces the propensity to run stop signs.
• D)Volvo drivers are willing to take risks that they would not take in another, less safe car. Driving a Volvo leads to a propensity to run stop signs.

Understand the distinction between capital and operating leases from both the lessee’s and lessor’s perspectives.

Know how minimum lease payments are constituted and the inclusion of residual value guarantees.

Analyze the impact of a capitalized lease on a lessee’s current ratio and overall financial statements.

Comprehend the purpose and effects of residual value guarantees in lease agreements.

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Definitions:

Duress

A condition wherein a person performs an act as a result of violence, threat, or other pressure against the person.

Non-lawyer

An individual who is not licensed to practice law or offer legal advice.

Undue Influence

An improper or excessive pressure exerted by one person on another in order to coerce that person into a contractual agreement or legal transaction.

Mental Impairment

A condition that affects a person's thinking, feeling, mood, or ability to relate to others, significantly affecting daily functioning.