- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 11. Intercorporate Investments
- Subject 6. Variable Interest and Special Purpose Entities
CFA Practice Question
Which statement is correct?
II. The primary beneficiary, not the equity investor, is entitled to benefit from increases in the VIE's asset fair values.
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. |