Which of the Following Statements Is True Regarding Special Purpose

question 105

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 (ABSs)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.

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Definitions:

Intangible Assets

Assets that lack physical substance and represent legal rights or competitive advantages (e.g., trademarks, patents).

Physical Substance

A characteristic of certain assets that possess material existence and can be seen, touched, or quantified.

Ownership

The legal right or state of having control and possession over something, such as property or a company.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in generating sales from its assets.