Special-Purpose Entity
Definition
A financing technique in which a company decreases its risk by creating separate partnerships, rather than subsidiaries, for certain holdings and solicits outside investors to take on the risk. In order to qualify as a special-purpose entity, whose financial results are not carried on the company's books, the unit must meet strict accounting guidelines. Compare to subsidary.
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Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University
Term of the Day
Statement of Additional Information (SAI)
A document provided as a supplement to a mutual fund prospectus. It provides more detailed information about fund policies, operations, and risks. Also known as a Part B prospectus.
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