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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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