A financial lease is similar to an operating lease, since
A. in both cases the lessee has the use of the asset.
B. in both cases the lease has a maintenance contract.
C. the lessee owns the asset.
D. the lease payment is not tax deductible.
Answer: A
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The competitive strategy of locking in customers by making it difficult for them to move to another product is called establishing high switching costs.
Answer the following statement true (T) or false (F)
A study conducted in a manufacturing setting examined the effects of initiating structure and consideration on follower stress levels. It found that:
a. initiating structure reduced follower stress by reducing role ambiguity and conflict, providing useful rules, and so forth b. surprisingly, consideration had no beneficial effects on stress levels c. initiating structure on average increased follower stress levels d. both “a” and “b”
In defense against payment, an insurance company can raise any of the defenses that would be valid in an ordinary action on a contract.
Answer the following statement true (T) or false (F)
James is a rational investor wishing to maximize his return over a 20-year period. The current yield curve is inverted with one-year rates at 5.00% and 20-year rates at 3.50%. James will invest in the lower-rate 20-year bonds if:
A) he thinks rates will fall in the future and locking in long-term rates today may provide the highest long-run average return. B) he thinks rates will rise in the future and locking in long-term rates today may provide the lowest long-run average return. C) he thinks rates will remain flat at 5% in the future and locking in long-term rates today will prevent him from appearing greedy to those without this investment opportunity. D) he thinks rates will rise in the future and locking in long-term rates today may provide the highest long-run average return.