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.

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Definitions:

Subordinates

Individuals who work under the supervision of someone else in an organizational hierarchy.

Chain Of Command

The chain of command links all persons with successively higher levels of authority.

Mixed Message

Communication that contains conflicting or ambiguous information, often leading to misunderstanding or confusion.

Body Language

The nonverbal communication expressed through physical behaviors such as gestures, posture, and facial expressions, often conveying feelings or attitudes.