Which One of These Statements Is False

question 18

Multiple Choice

Which one of these statements is false?

• A)Lenders are concerned about a firm's total liabilities including lease obligations.
• B)Debt displacement occurs with leasing.
• C)Less future debt can be raised for a growing firm when leasing occurs.
• D)Leasing allows the lessee to increase the benefits of debt capacity.
• E)Leases should be ignored when computing debt-equity or liability-equity ratios.

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Definitions:

Interest Rate

The amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.

Crowding Out

An economic situation where private investment decreases due to an increase in government borrowing and spending.

Household Spending

This refers to the total amount of money spent by households in an economy on goods and services over a particular period of time.

Net Exports

The value of a country's total exports minus its total imports, a crucial component of the gross domestic product.