Leasing Questions and Answers

Ques. In lease system, interest is calculated on
(a) Cash down payment
(b) Cash price outstanding
(c) Hire purchase price
(d) None of the above

Ans. (b)

Ques. A short-term lease which is often cancellable is known as
(a) Finance Lease
(b) Net Lease
(c) Operating Lease
(d) Leverage Lease

Ans. (c)

Ques. Which of the following is not a usual type of lease arrangement?
(a) Sale & leaseback
(b) Goods on Approval
(c) Leverage Lease
(d) Direct Lease

Ans. (b)

Ques. A lease which is generally not cancellable and covers full economic life of the asset is known as
(a) Sale and leaseback
(b) Operating Lease
(c) Finance Lease
(d) Economic Lease

Ans. (c)

Ques. Lease which includes a third party (a lender) is known as
(a) Sale and leaseback
(b) Direct Lease
(c) Inverse Lease
(d) Leveraged Lease

Ans. (d)

Ques. One difference between Operating and Financial lease is:
(a) There is often an option to buy in operating lease
(b) There is often a call option in financial lease.
(c) An operating lease is generally cancelable by lease
(d) A financial lease in generally cancelable by lease.

Ans. (c)

Ques. From the point of view of the lessee, a lease is a:
(a) Working capital decision
(b) Financing decision
(c) Buy or make decision
(d) Investment decision

Ans. (b)

Ques. For a lesser, a lease is a
(a) Investment decision
(b) Financing decision
(c) Dividend decision
(d) None of the above

Ans. (a)

Ques. Which of the following is not true for a “Lease decision for the lessee?
(a) Helps in project selection
(b) Helps in project financing
(c) Helps in project location
(d) All of the above

Ans. (b)

Ques. Risk-Return trade off implies
(a) Minimization of Risk
(b) Maximization of Risk
(c) Ignorance of Risk
(d) Optimization of Risk

Ans. (d)