Series 7 practice questionmediumDebt Securities — Agency Bonds — GNMA
Which US government agency's mortgage-backed securities carry the full faith and credit guarantee of the US government?
- AFederal Home Loan Mortgage Corporation (FHLMC/Freddie Mac)
- BFederal National Mortgage Association (FNMA/Fannie Mae)
- CGovernment National Mortgage Association (GNMA/Ginnie Mae)✓ Correct answer
- DFederal Home Loan Bank (FHLB)
Explanation
Why C — Government National Mortgage Association (GNMA/Ginnie Mae)
GNMA (Ginnie Mae) is the only government agency whose mortgage-backed securities carry the full faith and credit guarantee of the US government, making them the safest of all agency securities. FNMA and FHLMC are government-sponsored enterprises (GSEs) whose securities carry an implied but not explicit government guarantee. GNMA guarantees the timely payment of both principal and interest on its pass-through securities.
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