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Bonds 109: US Government Agency Bonds

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1.
US government agency bonds historically have provided somewhat higher earnings than Treasury securities.
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True. Over time, Ginnie Maes, Fannie Maes, and Freddie Macs have had somewhat higher yields than Treasury securities.
2.
Congress created Fannie Mae during _______.
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The Great Depression. Congress created the Federal National Mortgage Association in 1938 to make more dollars available for home loans to middle- and low-income citizens.
3.
The extension risk increases the amount of money the investor has to buy other securities at a time of high interest rates.
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False. The extension risk reduces the amount of money the investor has to buy other securities at a time of high interest rates, as the investor's bond pays more slowly when payment of the home mortgages in the pool is extended longer than planned.
4.
Which of the following issue government agency bonds?
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Government National Mortgage Association, Federal National Mortgage Association, World Bank agencies. The Government National Mortgage Association (GNMA) and the Federal National Mortgage Association (FNMA), along with other agencies including World Bank-related agencies and those that package student loans, all offer government agency bonds.
5.
One way you can purchase your first Ginnie Mae bond for less than $25,000 is _______.
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On the secondary market. You sometimes can buy Ginnie Maes that are selling for less than $25,000 on the secondary market if their interest rates are low compared to more recent issues or if their principals have been substantially reduced.