In a perfect market,where lessors compete with one another in initiating,the cost of leasing and then purchasing the asset ________ the cost of borrowing to purchase the asset.
A) is greater than
B) is equivalent to
C) is less than
D) is double

Question

Quizplus · Accepted Answer

In a perfect market with competition among lessors, the cost of leasing and then purchasing the asset should be equivalent to the cost of borrowing to purchase the asset. This is because lessors would have to price their leases competitively to attract customers, which would lead to lower leasing costs for the lessee. Additionally, the competition among lessors would lead to more favorable terms and pricing for the lessee compared to borrowing from a single lender. Therefore, the cost of leasing and then purchasing the asset should be similar to the cost of borrowing to purchase the asset.

In a Perfect Market,where Lessors Compete with One Another in Initiating,the