Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
Ginnie Mae, Fannie Mae, and Freddie Mac all combine mortgages into pools and then issue units in these pools to investors as bonds.
True. Ginnie Mae, Fannie Mae, and Freddie Mac all buy mortgages from financial institutions that made the loans and group them into pools. They then sell units in these pools to investors by issuing bonds through various financial institutions.
2.
Homeowners are least likely to prepay their mortgages when they _______.
Take out a home equity loan. Homeowners may prepay their mortgages when they sell their homes, refinance themespecially if mortgage interests rates fallor when they simply decide to pay down the principal.
3.
Of the several risks that US government agency bond investors must consider, perhaps the least likely is ______.
Risk of default. Government agency bonds are implicitly backed by the faith and credit of the US government.
4.
Fannie Mae and Freddie Mac are former US government agencies that are now privately held companies.
False. Fannie Mae and Freddie Mac are former US government agencies that are now publicly listed companies.
5.
When you invest in a Ginnie Mae bond, you usually receive a monthly payment including _______.
Interest and principal. Ginnie Mae investors usually receive a monthly payment that includes both interest and a portion of the outstanding principal. Or they may receive monthly payments including only interest, and then receive the principal back when the mortgage matures.
