The Following Are Sensible Reasons for Leasing

question 38

Multiple Choice

The following are sensible reasons for leasing:
I.Short-term leases are convenient.
II.Standardization leads to low administrative and transaction costs for the lessor.
III.Lease cancellation options are valuable.
IV.Tax shields can be used.

• A)I and II only
• B)I, II, and III only
• C)I, II, III, and IV
• D)I, II, and IV only

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Definitions:

Coupon Rates

Coupon Rates are the annual interest rates paid by bond issuers on the bond's face value, distributed typically in semi-annual payments.

Floating-Rate Bonds

Bonds with interest rates that adjust periodically based on a reference interest rate or index, protecting investors from interest rate risk.

Market Price

The price at which a product or service is traded in the competitive marketplace.

Put Provision

A clause found in certain securities that allows the holder to force the issuer to repurchase the security at specified prices before maturity.