The Most Important Issue That Makes It Possible for Both

question 86

Multiple Choice

The most important issue that makes it possible for both a lessor and lessee to gain from a financial lease arrangement is (aside from risk) :

• A)The lessee's better cash flow
• B)The lessor's purchasing power for leased assets
• C)The lessee's higher marginal tax rate
• D)The lessor's higher marginal tax rate

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Definitions:

Liability Rules

Legal principles that define the obligations of parties to compensate for damages or losses they have caused.

Compensate

To make amends or give an equivalent to someone for loss, damage, or suffering experienced.

Free-Rider Problem

A situation where individuals consume a good or service without paying for it, especially in the context of public goods.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be consumed by many people without depleting and without preventing others from consuming it.