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:

Exerting Influence

The act of using one’s power, personality, or strategies to affect or sway others' actions, decisions, or opinions.

Substantial Experience

Having a significant amount of knowledge, expertise, or practice in a particular area or field.

Power Equalization

Efforts or processes to balance power among parties, typically in negotiations or conflicts, to ensure fairness.

Employed

The state of being engaged in work or having a job.