Which option is NOT one of the three forms of purchase and renewal options in leasing?

Which option is NOT one of the three forms of purchase and renewal options in leasing?

• A. Nominal
• B. Fair Market Value
• C. Purchase upon termination
• D. Operating lease option

Answer: (D)

The concept here is how purchase or renewal rights are structured at the end of a lease. The three common forms are a nominal purchase option (buy for a token amount), a purchase option based on the asset’s fair market value, and a purchase upon termination (the right to buy when the lease ends). An “operating lease option” isn’t a purchase option—it describes a renewal or extension path for an operating lease rather than a path to ownership. Because it lacks a buy-right component, it doesn’t fit among the three purchase/renewal options.

The concept here is how purchase or renewal rights are structured at the end of a lease. The three common forms are a nominal purchase option (buy for a token amount), a purchase option based on the asset’s fair market value, and a purchase upon termination (the right to buy when the lease ends). An “operating lease option” isn’t a purchase option—it describes a renewal or extension path for an operating lease rather than a path to ownership. Because it lacks a buy-right component, it doesn’t fit among the three purchase/renewal options.