Which of the following is the definition of a leveraged lease?
A) An operating lease in which the lessee borrows a large portion of the lease payments.
B) A financial lease in which a firm sells an asset to the lessor and then leases it.
C) A long-term, fully amortized lease in which the lessee is responsible for asset upkeep.
D) A short-term lease in which the lessor is responsible for insurance, taxes, and upkeep.
E) A lease in which the lessor borrows a large portion of the cost of the leased asset.

Question

Quizplus · Accepted Answer

A leveraged lease involves a lessor using borrowed funds to acquire an asset that is then leased out to a lessee. The lessor typically borrows a significant portion of the asset's purchase price, using the asset itself as collateral for the loan.

Which of the Following Is the Definition of a Leveraged