7: TREASURY AND GOV SECURITIES (85)

Question 1

Farm Credit System (FCS)

Answer 1

Network of lending institutions that lends $ for agriculture

Question 2

3 securities the Farm Credit System (FCS) issues

Answer 2

1) discount notes
2) floating rate bonds
3) fixed rate bonds

Question 3

Does the Federal Home Loan Mortgage Corporation issue pass through securities?

Answer 3

Yes

Question 4

Does the fovernment national mortgage association issue pass through securities?

Answer 4

Yes

Question 5

Does the farm credit system (FCS) issue pass through securities?

Answer 5

No

Question 6

Does the Federal national mortgage assosiation issue pass through securities?

Answer 6

Yes

Question 7

Matruities on debt from the farm credit system range from ___ to ___

Answer 7

one day to 30 years

Question 8

2 risks that pass through securities face

Answer 8

1) default risk

2) pre payment risk

Question 9

Most common type of pass through securitity?

Answer 9

Morgtage backed security

Question 10

Pass through security

Answer 10

Pool of fixed income securities. One guy collects interest payments from the issuers, takes a fee, and passes it through to investors

Question 11

T/F: GMNA bonds are considered to be risk free

Answer 11

True

Question 12

Are Government national mortgage assosiation (GNMA) securities backed by the full faith and credit of the US gov?

Answer 12

Yes

Question 13

T/F: The only U.S. agency whose securities are considered direct obligations of the U.S. government is the Government National Mortgage Association.

Answer 13

True

Question 14

Is FNMA a publically held corporation

Answer 14

Yes

Question 15

T/F: Interest income on all mortgage backed securities is fully taxable

Answer 15

True

Question 16

How are treasury notes and bonds quotes?

Answer 16

in 32nds

Question 17

What’s so annoying about quotes on t bills and t bonds?

Answer 17

They are quoted in 32nds

Question 18

T/F: Bonds issued by US territories are triple tax exempt

Answer 18

True

Question 19

Would you pay income tax on bonds issued by the us virgin islands?

Answer 19

No

bonds from territories are triple tax exempt

Question 20

As a general rule, debentures pay interest every ____

Answer 20

six months

Question 21

T/F: Interet on non-mortgage backed gov securities is taxable at federal but exempt from state and local

Answer 21

True

Question 22

Taxes for interest on Sallie Mae debentures

Answer 22

Taxable at federal

exempt from state & local

Question 23

T/F: interest income from most U.S. government and agency securities is exempt from state and local—but not federal—taxes

Answer 23

True

Question 24

T/F: Mortgage-backed securities (such as FNMA and GNMA obligations) are subject to federal, state, and local taxes

Answer 24

True

Question 25

Is interest on muni issues within the state you live in exempt from state taxes?

Answer 25

Yes

Question 26

T/F: If you live in IL and you buy a muni from Chicago, you don’t pay taxes for interest on the bond

Answer 26

True

If you buy a bond from your home state, no state tax

Question 27

Government National Mortgage Association (GNMA or Ginnie Mae)

Answer 27

Gov corporation that guarentees timely payment of interest/principal on MBSs

Question 28

T/F: was established to stimulate the housing market by making more mortgages available to moderate- to low-income borrowers.

Answer 28

True

Question 29

T/F: The federal national mortgage association (Fannie Mae) does not origiate or provide mortgages to borrowers

Answer 29

True

Question 30

Two largest purchasers of mortgages on the secondary market

Answer 30

1) Fannie Mae

2) Freddie Mac

Question 31

Nickname for Federal Home Loan Mortgage Corp (FHLMC)

Answer 31

Freddie Mac

Question 32

Main difference between Fannie Mae and Freddie Mac

Answer 32

Fannie Mae buys mortgage’s from large banks, Freddie Mac buys from smaller banks

Question 33

T/F: Freddie Mac doesn’t originate or service home mortgages, but rather buys loans from mortgage lenders, freeing up their capital for more lending.

Answer 33

True