All of the following observations concerning off-balance-sheet arrangements are true, EXCEPT:
A) a common use is to allocate risks among third parties.
B) they might include structured finance or special purpose entities.
C) they are often used to engage in leasing, hedging, or research and development services.
D) they are considered illegal under SEC guidelines.

Question

Quizplus · Accepted Answer

Off-balance-sheet arrangements are not considered illegal under SEC guidelines. While they can be used for nefarious purposes like hiding debt, they can also serve legitimate business purposes such as managing risk or financing new ventures.

All of the Following Observations Concerning Off-Balance-Sheet Arrangements Are True