Which of the following is the more traditional form of off-balance sheet subsidiary for removing loans from the FIs balance sheet?
A)Special Purpose Vehicle (SPV)
B)Asset-Backed Structure (ABS)
C)Structured Investment Vehicle (SIV)
D)Collateralized Mortgage Operation (CMO)

Question

Quizplus · Accepted Answer

Special Purpose Vehicles (SPVs) are the more traditional form of off-balance sheet subsidiary for removing loans from the FIs balance sheet. These are entities that are created for a specific purpose, typically to hold specific assets or liabilities, and are designed to be legally and financially separate from the parent company. This allows the FIs to remove the assets or liabilities from their balance sheet, and therefore reduce their risk exposure and capital requirements. ABS, SIV, and CMO are also off-balance sheet structures, but they are typically used for more specialized purposes, such as securitizing assets, investing in complex financial instruments, or managing a portfolio of mortgage-backed securities.

Which of the Following Is the More Traditional Form of Off-Balance