Series 7 Exam Question 73: Answer and Explanation

Question: 73

Which of the following type of equipment leasing programs is the riskiest for investors?

• A. Operating lease
• B. Full payout lease
• C. Value lease
• D. Partial pay lease

Correct Answer: A

Explanation:

A. An operating lease is when the equipment is only leased for a short period of time, so it is riskier for investors. As equipment gets older and possibly outdated, it becomes less desirable for companies to lease. A full payout lease is best for investors because the equipment is leased out for a long enough period of time to recoup the cost of the equipment purchased. Answers (C) and (D) are made-up answers.