BROWSE

Fair Market Value Purchase Option

What is 'Fair Market Value Purchase Option'

The right but not the obligation to buy a leased asset at the end of the lease term for a price that represents the item's then-current worth. The Fair Market Value Purchase Option does not provide the purchase price in advance, but as long as the assessed fair market value is accurate, the consumer will not overpay for the asset and the lessor will not receive less than the asset is worth.

Explaining 'Fair Market Value Purchase Option'

Types of assets that may come with a fair market value purchase option include automobiles, real estate and heavy equipment.


A common alternative to the fair market value purchase option is the fixed price purchase option, which allows the lessee to know for certain what the cost to purchase the property at the end of the lease term will be. Because it is impossible to determine an item's fair market value in advance of the item's purchase date, a purchase price cannot be established in advance with a fair market value purchase option.


Further Reading


The dark side of financial innovation: A case study of the pricing of a retail financial product
www.sciencedirect.com [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …

Valuation of asset leasing contractsValuation of asset leasing contracts
www.sciencedirect.com [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …

Analytic issues in lease vs. purchase decisionsAnalytic issues in lease vs. purchase decisions
www.jstor.org [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …

Financial valuation of guaranteed minimum withdrawal benefitsFinancial valuation of guaranteed minimum withdrawal benefits
www.sciencedirect.com [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …

Leases with purchase options and double moral hazardLeases with purchase options and double moral hazard
onlinelibrary.wiley.com [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …

Is economics performative? Option theory and the construction of derivatives marketsIs economics performative? Option theory and the construction of derivatives markets
www.cambridge.org [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …

Time charters with purchase options in shipping: Valuation and risk managementTime charters with purchase options in shipping: Valuation and risk management
www.tandfonline.com [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …

Assessing the impact of fair value upon financial crisesAssessing the impact of fair value upon financial crises
academic.oup.com [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …

System, method, and lease structure for cross-border financingSystem, method, and lease structure for cross-border financing
patents.google.com [PDF]
… Outside the US markets, Szymanowska, Horst, and Veld (2009) estimate the values of … Because Morgan Stanley's marketing costs, hedging costs, any other costs, and profit are … reference equity, coupon rate, issue price, and three estimates of fair market value computed using …