Which of the following statements is TRUE of leasing?
A) It is an arrangement in which a contractor supplies managerial know-how to operate a hotel, hospital, airport, or other facility in exchange for compensation.
B) The lessor transfers ownership of the property in exchange for a lump-sum payment.
C) It is a high-risk and high-cost method of entering a foreign market.
D) A major advantage for the focal firm is the ability to gain quick access to target markets, while putting assets to use in earning profits.

Question

Quizplus · Accepted Answer

Leasing allows a firm to quickly access target markets and utilize assets for profit without the high costs and risks associated with purchasing property or equipment outright. It does not typically involve transferring ownership for a lump sum (as in selling), nor does it primarily involve providing managerial know-how for operation (more akin to a management contract), and it is generally not considered a high-risk, high-cost market entry method.

Which of the Following Statements Is TRUE of Leasing