One Difference Between a Special Purpose Vehicle (SPV) and a Structured

question 105

Multiple Choice

One difference between a Special Purpose Vehicle (SPV) and a Structured Investment Vehicle (SIV) is that the

• A)SIV can potentially earn an expected spread between its high-yielding assets and the relatively short-term, low cost funds that it borrows in addition to servicing fees.
• B)SPV retains ownership of the loans while the SIV sells the loans without recourse so the loan rights are transferred to the investor.
• C)SPV may have a line of credit or a loan commitment from the sponsoring institution if a loan goes bad and it cannot make payments to investors; the SIV has no such arrangement.
• D)SIV is just passing cash flows it receives through to the ultimate investor; the SPV has fixed payment obligations that must be met regardless of cash flows received on the loan portfolio.
• E)SPV is formed by depository institutions and the SIV is formed by non-depository institutions.

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