New 55% Off on All Courses - Enroll Now! Click Here

    Question

    Which of the following is not a key characteristic of

    project financing?
    A Limited recourse Correct Answer Incorrect Answer
    B Non-recourse Correct Answer Incorrect Answer
    C Full recourse Correct Answer Incorrect Answer
    D Ring-fencing Correct Answer Incorrect Answer
    E All of the above are correct Correct Answer Incorrect Answer

    Solution

    Full recourse is not a key characteristic of project financing. In fact, project financing is typically structured as a limited or non-recourse loan, which means that the lender's recourse to the project sponsors is limited to the assets and cash flows of the project itself. Limited or non-recourse financing is a key feature of project financing because it helps to reduce the risk for the lender. In limited or non-recourse financing, the lender does not have access to the project sponsors' other assets in case of default, but instead can only recover its investment from the project assets and cash flows.

    Practice Next

    Relevant for Exams: