Which of the Following Statements Is False

question 18

Multiple Choice

Which of the following statements is false?

• A) In a leveraged lease the lessor borrows from a bank or other lender to obtain the initial capital for the purchase, using the lease payments to pay interest and principal on the loan.
• B) In some circumstances, the lessor is not an independent company but rather a separate business partnership, called a special-purpose entity (SPE), which is created by the lessee for the sole purpose of obtaining the lease.
• C) In a direct lease, the lessor is not the manufacturer, but is often an independent company that specializes in purchasing assets and leasing them to customers.
• D) SPEs are commonly used in synthetic leases, which are designed to obtain specific accounting and tax treatment.

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Definitions:

Output Effect

The change in total revenue resulting from a change in quantity sold, holding price constant.

Price Effect

The price effect describes how changes in price influence the quantity demanded or supplied in the market.

Oligopolist

A market participant in an oligopoly, a market dominated by a small number of firms.

Production Decision

The determination made by a firm regarding the quantity of goods or services to be produced, based on factors like cost of production, market demand, and competition.