The following questions are from Chapter 26 Securitization. One difference between a Special Purpose Vehicle (SPV) and a Structured Investment vehicle (SIV) is that the A. SIV can potentially earn an expected spread between its high-yielding assets and the relatively short-term, low cost funds that it borrows in addition to servicing fees. 8. SPV retains ownership of the loans while the SIV sells the loans without recourse so the loan rights are transferred to the investor CSPV may have a line of credit or a loan commitment from the sponsoring institution if a loan goes bad and it cannot make payments to investors, the SIM has no such arrangement. D. SIV is just passing cash flows it receives through to the ultimate investor, the SPV has fixed payment obligations that must be met regardless of cash flows received on the loan portfolio E. SPV is formed by depository institutions and the SIV is formed by non depository institutions QUESTION 14 Which of the following does NOT contribute to the fact (before the financial crisis) that SIV is a more lucrative model than SPV in general? A. Unlike SPV, SIV investors have no direct rights to the cash flows on the underlying loans in the portfolio B. SIV'S ABCP obligations carry interest obligations that are independent of the cash flows from the underlying loan/asset portfolio, while SPV pays out what it receives from the underlying loans in the pool of assets backing the ABS c. Whereas a SPV earns only the fee for the creation of the asset-backed securities, the SIV earns an expected spread between high-yielding assets and low cost commercial paper D. SIV invests in assets that are designed to generate higher returns than the SIV's cost of fund. E. If the assets in the underlying pool does not generate sufficient cash flows, the SI is still obligated to make interest and principle payments on its debt Instruments