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    Question

    In project finance, what is the main reason for

    establishing a Special Purpose Vehicle (SPV) from a financial risk management perspective?
    A To reduce taxation on international investments Correct Answer Incorrect Answer
    B To secure early-stage project subsidies Correct Answer Incorrect Answer
    C To enable flexible hiring of consultants Correct Answer Incorrect Answer
    D To isolate financial risk and protect parent companies Correct Answer Incorrect Answer
    E To consolidate projects under one umbrella Correct Answer Incorrect Answer

    Solution

    SPVs protect the parent company by ring-fencing liabilities to a standalone legal entity.

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