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      Question

      In project finance, a 'Special Purpose Vehicle (SPV)' is

      created primarily to:
      A Manage construction Correct Answer Incorrect Answer
      B Isolate financial risk and for bankruptcy remoteness Correct Answer Incorrect Answer
      C Market the project output Correct Answer Incorrect Answer
      D Handle government relations Correct Answer Incorrect Answer
      E Employ the workforce Correct Answer Incorrect Answer

      Solution

      An SPV is a separate legal entity (usually a limited company) created solely for a specific project. Its primary purposes are to isolate the financial risk of the project from the parent company (ring-fencing) and to achieve "bankruptcy remoteness," meaning the failure of the parent company does not directly impact the SPV and its project.

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