SIE practice questionmediumAgency Bonds
Which statement about the Government National Mortgage Association (GNMA) is correct?
- AGNMA securities cannot be purchased by individuals
- BGNMA is privately owned and operated
- CPayments are subject to default risk
- DInterest and principal payments are backed by the full faith and credit of the U.S.✓ Correct answer
Explanation
Why D — Interest and principal payments are backed by the full faith and credit of the U.S.
GNMA is a government agency; its securities are fully backed by the U.S. They are not privately owned, have minimal default risk, and individuals may invest.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Debt Securities questions
- What does duration measure in relation to a bond?
- A 5% bond matures in 10 years and is selling for 92. What does the yield to maturity (YTM) indicate as compared to…
- What is one benefit of investing in Treasury STRIPS?
- Which of the following is TRUE of both Treasury notes and Treasury bonds?
- A bond is structured so that the investor can force the issuer to redeem early at predetermined dates. This feature is…
- A city issues a bond to finance the construction of a toll bridge, with principal and interest payable solely from toll…
- Which is a disadvantage of zero-coupon bonds?
- Which of the following most accurately describes the primary risk associated with investment-grade corporate bonds?