What is one key feature of a government lease-purchase agreement?

Prepare for CGFM Exam 1 – Governmental Environment. Utilize flashcards and multiple-choice questions with explanations and hints. Ace your exam!

One key feature of a government lease-purchase agreement is that assets may transfer to the government at the end of the lease. In this type of financing arrangement, the government essentially leases an asset for a specified period and, upon fulfilling the lease obligations, has the option or the obligation to purchase the asset outright. This arrangement allows governments to use the asset and make payments over time, ultimately resulting in ownership after the lease term. This can be particularly advantageous for governments seeking to acquire essential equipment or property while managing budgetary constraints, as they avoid upfront capital expenditures.

In contrast, the other choices do not capture the essence of a lease-purchase agreement accurately. The first option incorrectly implies there is no lease term involved, while the second suggests it is typically short-term with high-interest payments, which does not reflect the common structure of lease-purchase agreements. Lastly, the idea of requiring constant re-evaluation by voters pertains more to issues of transparency and accountability in government financing decisions but does not specifically characterize lease-purchase agreements.

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