Of the Five Criteria for a Finance Lease, Which One

question 85

Multiple Choice

Of the five criteria for a finance lease, which one is not applied if the lease begins "at or near the end" of the economic life of the underlying asset?

• A) A purchase option is reasonably certain to be exercised.
• B) The economic life test.
• C) The present value of lease payments greater or equal to substantially all of fair value test.
• D) The passage of title criteria.

Recognize the utility theory basics and its application in investment decisions.

Understand the role of the capital market line (CML) in investment decisions.

Understand and calculate expected returns on risky and risk-free assets.

Comprehend the formation and expected outcome of portfolios containing risky and risk-free assets.

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Definitions:

Purported Partner

Implies someone alleged or claimed to be a partner in a business or enterprise, often without the legal or formal acknowledgment of such a partnership.

Substantial Reliance

A level of dependence on a promise or statement significant enough to alter one's position, often referenced in contract law.

Detrimental Reliance

A legal concept where a party suffers a loss because they relied on a promise or representation that was later breached or not fulfilled.

Creditor

A creditor is an entity (person or institution) that lends money or extends credit to another entity, expecting to be repaid in the future.