Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 19, Problem 4Q
Summary Introduction
To determine: The manner in which investments in municipal bonds and REIT’s could decrease a bank’s willingness to act as a lessor.
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Commercial banks moved heavily into equipment leasing during the early1970s, acting as lessors. One major reason for this invasion of the leasingindustry was to gain the benefits of accelerated depreciation and the investment tax credit on leased equipment. During this same period, commercialbanks were investing heavily in municipal securities, and they were alsomaking loans to real estate investment trusts (REITs). In the mid-1970s, theseREITs got into such serious difficulty that many banks suffered large losseson their REIT loans. Explain how its investments in municipal bonds andREITs could reduce a bank’s willingness to act as a lessor.
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Instructions
Explain how reported accounting numbers might affect an individual’s perceptions and actions. Cite two examples.
Chapter 19 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 19 - Define each of the following terms: a. Lessee;...Ch. 19 - Distinguish between operating leases and financial...Ch. 19 - Prob. 3QCh. 19 - Prob. 4QCh. 19 - Prob. 5QCh. 19 - Prob. 6QCh. 19 - Prob. 7QCh. 19 - Prob. 8QCh. 19 - Reynolds Construction (RC) needs a piece of...Ch. 19 - Lease versus Buy Consider the data in Problem...
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