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

question 6

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.

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Definitions:

Trade Balance

The difference in value between a country's imports and exports over a given period, a component of a country's balance of payments.

Merchandise Exports

Goods produced within a country and sold to customers in another country, contributing to the country's gross domestic product.

Capital Account

A national account that records the transactions involving international transfer of capital, such as foreign direct investments and portfolio investments.

Balance of Goods

The difference in value between a country's imports and exports of physical products.