ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Loss making company looking for investors
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Makes money off commissions from selling investments to individuals or businesses
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is a subsidiary of a company which is bankruptcy remote from the main organization (i.e. protected even if the parent organization goes bankrupt).
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Government subsidiaries in developed economies
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Detailed explanation-1: -What is a Special Purpose Vehicle (SPV)? A Special Purpose Vehicle (SPV) is a separate legal entity created by an organization. The SPV is a distinct company with its own assets and liabilities, as well as its own legal status. Usually, they are created for a specific objective, often to isolate financial risk.
Detailed explanation-2: -A special purpose vehicle, also called a special purpose entity (SPE), is a subsidiary created by a parent company to isolate financial risk. Its legal status as a separate company makes its obligations secure even if the parent company goes bankrupt.
Detailed explanation-3: -What is a Special Purpose Vehicle (SPV)? A Special Purpose/Project Vehicle (SPV) is a legal entity that undertakes a project. All contractual agreements between the various parties are negotiated between themselves and the SPV.
Detailed explanation-4: -A special purpose entity (or a special purpose vehicle) is a legal entity that has been established to separate an asset, subsidiary, or financial transaction from a larger corporation or government agency.
Detailed explanation-5: -A typical example of an SPV would be a distinct legal entity created by a bank to securitise its pool of asset-backed loans. The SPV attracts investors to invest in those securitised assets, obtaining secondary income and reducing credit risks.