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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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