Which of the Following Statements Is True Regarding Special Purpose

question 16

Multiple Choice

Which of the following statements is true regarding Special Purpose Vehicles (SPVs) and structured investment vehicles (SIVs) ?

• A)An SPV has no contingent credit risk when it sells asset-backed securities (ABS) with recourse to investors.
• B)An SPV retains the rights to the loans that are used as collateral in an asset-backed security.
• C)An SIV potentially has more liquidity risk than the sponsoring FI due to the short-term nature of the liabilities and their reliance on short-term funds.
• D)An SPV is allowed to accept deposits while the SIV must rely solely on other borrowings.
• E)An SIV is not a lucrative or profitable as an SPV.

---

Definitions:

Land Account

An account used in accounting to record the cost of land owned by a company.

Broker's Fees

Charges paid to an intermediary for their services in facilitating transactions like buying or selling stocks or real estate.

Purchase Price

The amount of money paid to acquire a good, service, or asset, often before any discounts or adjustments.

Land Improvements

Enhancements made to a parcel of land to increase its value, such as landscaping, irrigation systems, and roads.