CFA Practice Question

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CFA Practice Question

Which statement is correct?

I. A VIE's risk and rewards are distributed according to stock ownership.
II. The primary beneficiary, not the equity investor, is entitled to benefit from increases in the VIE's asset fair values.
A. I only
B. II only
C. Both I and II
Explanation: I is false. They are distributed according to other variable interests.

User Contributed Comments 2

User Comment
Rotigga If II is true, then why would anybody want to be an equity investor in a VIE if you don't participate in the upside???
piano they get other benefits offered by the primary beneficiary.
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