All Courses > Bonds > 100
Bonds 109: US Government Agency Bonds

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Fannie Mae and Freddie Mac are former US government agencies that are now privately held companies.
Choose wisely. There is only one correct answer.
False. Fannie Mae and Freddie Mac are former US government agencies that are now publicly listed companies.
2.
Homeowners are least likely to prepay their mortgages when they _______.
Choose wisely. There is only one correct answer.
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.
The minimum initial investment in a Ginnie Mae bond is _______.
Choose wisely. There is only one correct answer.
$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.
4.
The extension risk increases the amount of money the investor has to buy other securities at a time of high interest rates.
Choose wisely. There is only one correct answer.
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.
5.
Ginnie Mae, Fannie Mae, and Freddie Mac all combine mortgages into pools and then issue units in these pools to investors as bonds.
Choose wisely. There is only one correct answer.
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.