medium · Asset-Backed Securities
An equipment lease ABS analyst is comparing a pool of 'finance leases' and 'operating leases'.
Which statement correctly identifies the primary difference in risk assessment?
- Finance leases are only used for consumer vehicles.
- Operating leases are structured like bullet bonds.
- Operating leases introduce significant 'residual value risk' at the end of the lease term.
- Finance leases have no default risk.
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