The Lessee in a Financial Lease Bears the Most of the Same

question 70

Multiple Choice

The lessee in a financial lease bears the most of the same risks and rewards as ownership except:

• A)He doesn't know how large his lease payments are
• B)He has no tax shelter for his cash outflows
• C)He has no access to capital gain from an extraordinary salvage value
• D)He can cancel his obligations to a lessor with 30 days' notice

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, with holders typically having voting rights and receiving dividends.

Market Price

The present rate at which a good or service is available for purchase or sale in an open market.

Cash Dividend

Funds distributed by a business to its owners, often sourced from its profits.

Treasury Stock

Shares that were issued and subsequently reacquired by the company, reducing shareholders' equity.