Which of the following statements is true concerning variable interest entities (VIEs)?
1) The role of the VIE equity investors can be fairly minor.
2) A VIE may be created specifically to benefit its sponsoring firm with low-cost financing.
3) VIE governing agreements often limit activities and decision making.
4) VIEs usually have a well-defined and limited business activity.
A) 2 and 4.
B) 2, 3, and 4.
C) 1, 2, and 4.
D) 1, 2, and 3.
E) 1, 2, 3, and 4.

Question

Quizplus · Accepted Answer

All the statements are true regarding VIEs: equity investors can have a minor role, they can be created for low-cost financing, governing agreements can limit activities, and they often have limited business activities.

Which of the Following Statements Is True Concerning Variable Interest