7: TREASURY AND GOV SECURITIES (85) Flashcards
Farm Credit System (FCS)
Network of lending institutions that lends $ for agriculture
3 securities the Farm Credit System (FCS) issues
1) discount notes
2) floating rate bonds
3) fixed rate bonds
Does the Federal Home Loan Mortgage Corporation issue pass through securities?
Yes
Does the fovernment national mortgage association issue pass through securities?
Yes
Does the farm credit system (FCS) issue pass through securities?
No
Does the Federal national mortgage assosiation issue pass through securities?
Yes
Matruities on debt from the farm credit system range from ___ to ___
one day to 30 years
2 risks that pass through securities face
1) default risk
2) pre payment risk
Most common type of pass through securitity?
Morgtage backed security
Pass through security
Pool of fixed income securities. One guy collects interest payments from the issuers, takes a fee, and passes it through to investors
T/F: GMNA bonds are considered to be risk free
True
Are Government national mortgage assosiation (GNMA) securities backed by the full faith and credit of the US gov?
Yes
T/F: The only U.S. agency whose securities are considered direct obligations of the U.S. government is the Government National Mortgage Association.
True
Is FNMA a publically held corporation
Yes
T/F: Interest income on all mortgage backed securities is fully taxable
True
How are treasury notes and bonds quotes?
in 32nds
What’s so annoying about quotes on t bills and t bonds?
They are quoted in 32nds
T/F: Bonds issued by US territories are triple tax exempt
True
Would you pay income tax on bonds issued by the us virgin islands?
No
bonds from territories are triple tax exempt
As a general rule, debentures pay interest every ____
six months
T/F: Interet on non-mortgage backed gov securities is taxable at federal but exempt from state and local
True
Taxes for interest on Sallie Mae debentures
Taxable at federal
exempt from state & local
T/F: interest income from most U.S. government and agency securities is exempt from state and local—but not federal—taxes
True
T/F: Mortgage-backed securities (such as FNMA and GNMA obligations) are subject to federal, state, and local taxes
True
Is interest on muni issues within the state you live in exempt from state taxes?
Yes
T/F: If you live in IL and you buy a muni from Chicago, you don’t pay taxes for interest on the bond
True
If you buy a bond from your home state, no state tax
Government National Mortgage Association (GNMA or Ginnie Mae)
Gov corporation that guarentees timely payment of interest/principal on MBSs
T/F: was established to stimulate the housing market by making more mortgages available to moderate- to low-income borrowers.
True
T/F: The federal national mortgage association (Fannie Mae) does not origiate or provide mortgages to borrowers
True
Two largest purchasers of mortgages on the secondary market
1) Fannie Mae
2) Freddie Mac
Nickname for Federal Home Loan Mortgage Corp (FHLMC)
Freddie Mac
Main difference between Fannie Mae and Freddie Mac
Fannie Mae buys mortgage’s from large banks, Freddie Mac buys from smaller banks
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.
True
