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JAIIB AFM Unit 26 — Equipment Leasing - Lease Financing: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 3 of the November 2026 cycle (28 November 2026)

This page is a free slice of our JAIIB AFM question bank for Unit 26 — Equipment Leasing - Lease Financing (Module C — Financial Management). The Mock Centre holds 17 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

AFM · Module C17 MCQs in the Mock Centre5 free belowPaper on 28 November 2026

Key facts examiners test from this unit

  1. Lease = ownership stays with the LESSOR, use passes to the LESSEE for periodic LEASE RENTALS.
  2. Finance lease = substantially ALL risks and rewards transferred — economically a purchase on credit; operating lease = short, cancellable, lessor bears upkeep/obsolescence.
  3. Leveraged lease = THREE parties (lessor + lessee + lender financing the lessor's purchase).

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
In a lease, the OWNER of the asset is the:
Why (b): The LESSOR owns the asset; the lessee only uses it against rentals.
Question 2 of 5
The payment made by the lessee is called:
Why (b): The lessee pays LEASE RENTALS — the lessor's capital recovery plus return.
Question 3 of 5
Which is correct about a lease?
Why (b): The defining split: OWNERSHIP with the lessor, USE with the lessee.
Question 4 of 5
A LEVERAGED lease involves how many parties?
Why (c): A LEVERAGED lease has THREE parties: lessor, lessee and the LENDER who finances most of the lessor's asset cost.
Question 5 of 5
In a finance lease (traditional Indian treatment), depreciation is generally claimed by the:
Why (b): In the traditional Indian treatment, tax depreciation follows LEGAL ownership — the LESSOR claims it; the lessee deducts rentals.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
LessorLesseeOwns the asset vs uses the asset
Finance leaseOperating leaseRisks/rewards transferred, non-cancellable vs short, cancellable, lessor maintains
Practise all 17 questions on Unit 26. The free demo opens a slice of every subject with the same explanations; the AFM Online-only pass unlocks all 1,681 AFM questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.