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Check all true statements anout SPVs(is not mutiple choice question, please cheeck all true statements)

A; SPV stands for Special Private Vehicle

B; SPV is set up to sepatate the risk of lenders and investors

C; If the lender goes bankrupt, the investor assets within an SPV are unprotected form the bankruptcy judgement

D; If an MBS foes bust, the lender is protected from investors' claims

Respuesta :

Ojcordelia

Answer:

Only statement B

Explanation:

SPV stands for special purpose vehicle or special purpose entity (SPE)

If the lender goes bankrupt, the investors assets within the SPV are protected from the bankruptcy judgement. The same goes for vice versa as if the SPV goes bankrupt the lender is protected from the bankruptcy judgement, reason being that they are both separate legal entities.

If an MBS (Mortgage backed security) goes bust, the lender is not protected from investors claim as they still operate the lender-borrower relationship where the lender is required to repay the debt

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