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Bonds 109: US Government Agency Bonds

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1.
The minimum initial investment in a Ginnie Mae bond is _______.
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$25,000. The minimum investment for a Ginnie Mae is generally $25,000, although you sometimes can buy them for less than $25,000 on the secondary market, as well as through shares in mutual funds or investment trusts that invest in Ginnie Maes.
2.
Fannie Mae and Freddie Mac are former US government agencies that are now privately held companies.
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False. Fannie Mae and Freddie Mac are former US government agencies that are now publicly listed companies.
3.
Freddie Mac bonds are perceived as safer than Ginnie Mae bonds.
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False. Ginnie Mae securities are perceived as safer from default than Freddie Macs.
4.
One advantage of government agency bonds is _______.
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Higher return potential than that of Treasury securities. Agency bonds generally offer higher returns than Treasury securities do, along with higher volatility as the market for these securities responds to changes in mortgage rates.
5.
Homeowners are least likely to prepay their mortgages when they _______.
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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.