A primary difference between leveraged leases and other financial leases is that ____.
A) leveraged leases must be capitalized and shown on the lessee's balance sheet
B) the lessor in a leveraged lease is invariably the manufacturer of the leased asset
C) leveraged leases involve the use of nonrecourse debt
D) unleveraged leases are usually tax-motivated

Question

Quizplus · Accepted Answer

The primary difference between leveraged leases and other financial leases is that leveraged leases involve the use of nonrecourse debt. This means that in the case of default, the lender can only seize the leased asset and cannot pursue other assets of the lessee. This type of lease is commonly used for assets with long useful lives, such as real estate or large machinery.

A Primary Difference Between Leveraged Leases and Other Financial Leases