Debt Displacement Is Associated with Leases Because

question 5

Multiple Choice

Debt displacement is associated with leases because:

• A) all assets not purchased with equity use debt financing.
• B) debt is always a cheaper source of financing and is lost as leasing is used.
• C) ICA3065 and the CRA mandate debt displacement.
• D) lease financing is all debt and causes an imbalance in the optimal debt to equity ratio which reduces future debt financing.

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Definitions:

Partner Competes

An act where a partner engages in a business activity that competes with the business of the partnership, potentially violating their fiduciary duty.

Competing Venture

A business or project undertaken by an entity that is in direct competition with another enterprise in the same market segment.

Additional Compensation

Extra payment or remuneration provided to an employee or contractor beyond their basic salary or fees, often for achieving specific targets or for extra duties.

Small Partnerships

Business arrangements involving a limited number of partners collaborating in a venture, typically characterized by less regulatory requirements and personal liability.