An SIV,or Structured Investment Vehicle,is an Off-Balance-Sheet Entity That Shields

question 56

Multiple Choice

An SIV,or structured investment vehicle,is an off-balance-sheet entity that shields a sponsoring institution from risk.What happened to some of these SIVs when they ran into financial problems?

• A) The SIV sued the sponsoring institution to pay, in full, all liabilities of the SIV.
• B) The SIV still remained off-balance-sheet, but investors did sue sponsoring institutions.
• C) Nothing! The SIV status as off-balance-sheet remained, a nice example of a financial structure that worked during the financial crisis.
• D) Troubled SIVs became an asset of the sponsoring institution - the off-balance-sheet status was meaningless.

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Definitions:

Nonrecurring Items

Expenses or incomes that are not expected to happen regularly in a company's financial operations, often excluded for analysis purposes.

Accounting Quality Concerns

Issues related to the accuracy, reliability, and integrity of a company's financial statements and accounting practices.

Common Size Balance Sheet

A balance sheet in which all line items are expressed as a percentage of total assets to allow for easy comparison across periods and with other companies.

Total Liabilities And Equity

The sum of all financial obligations and ownership equity of a company, representing the total sources of funds used to finance its assets.