A Financial Lease Has the Following as Its Primary Characteristics

question 42

Multiple Choice

A financial lease has the following as its primary characteristics:

• A) is fully amortized, lessee maintains equipment and there is no renewal clause and no cancellation clause.
• B) is not fully amortized, lessor maintains equipment and there is a renewal clause but no cancellation clause.
• C) is fully amortized, lessor maintains equipment and there is a renewal clause and a no cancellation clause.
• D) is not fully amortized, lessor maintains equipment and there is a renewal clause.
• E) is fully amortized, lessee maintains equipment and there is a renewal clause and a no cancellation clausE.

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Definitions:

Perfect Substitutes

Goods for which the indifference curves are straight lines; the marginal rate of substitution of one good in place of another good is constant, regardless of how much of each an individual consumes.

Consumer Equilibrium

A state where an individual consumer has optimized their utility, given their budget constraints, choosing the best possible goods or service mix.

Budget Constraint

The limits placed on the consumption choices of individuals by their income and the prices of goods and services.

Utility

An indicator of pleasure or contentment obtained from the acquisition and use of products and services.