Unit 7 Flashcards
- Interest on corporate bonds is
- Interest on municipal securities is
- Interest on issues of the Federal Government is
- Interest on mortgage backed securities is
- Interest in issues of US territories qualifies for
- Taxable on all levels
- May be taxed by the municipal level but not by federal government
- Taxes by federal government but exempt on state and local levels
- Taxes on all levels
- Triple tax exemption
National network of lending institutions that provides agricultural financing and credit
Privately owned, government sponsored
Backed by the Banks of the FCS
Farm credit system (FCS)
Risk that underlying mortgages will remains outstanding longer than anticipated
Extended maturity risk of extension risk
Risk that underlying mortgages will be paid off earlier than anticipated
Prepayment risk
A wholly government owned corporation that issues pass through mortgage debt certificates baked by the full faith and credit of the US government
Government national mortgage association (GNMA)
A measure of price changes in a market basket of consumer goods and services used to identify periods of inflation or deflation
Consumer price index (CPI)
A zero coupon bond issued and backed by US Department of Tresury
Separate Trading of Registered Interest and Principal of Securities (STRIPS)
The generic term for a zero coupon bond issued by a brokerage firm and collateralized by the Treasury securities a custodian holds in escrow for the investor
Treasury receipt
A marketable fixed interest US government debt security with a maturity of between 2-10 years
Treasure Note (T-Note)
A marketable US government debt security with a maturity of 52 weeks or less
Treasury Bill (T-Bill)
A marketable fixed interest US government debt security with a maturity of more than 10 years
Treasury Bond (T-Bond)
Denomination of
GNMA are
FCS are
FHLMC are
FNMA are
SLMA are
GNMA- min of $1000 and multiples of $1 in excess of $1000. Yield quotes on 12 yr prepayment
FCS- $1000 with $1000 increments
FHLMC- different minimums
Discount notes- $1000, $1000
Reference notes - $2000, $1000
FNMA- $1000 with $1 increments. Interest paid semiannually
SLMA- $10,000
A publicly traded corporation that promotes the nationwide secondary market in mortgages by issuing mortgage backed pass through debt certificates
Federal home loan mortgage corporation (FHLMC)
Make principal and interest payments once a month
Sold by FHLMC
Mortgage participation certificates (PC)
Makes interest payments twice a year and principal payments once a year
Guaranteed mortgage certificates (GMC)
Publicly held corporation that provides mortgage capital. Purchases conventional insured mortgages from agencies such as FHA and VA.
Backed by general credit of FNMA
Federal national mortgage association (FNMA)
A publicly owned corporation that purchases student loans from financial institutions and packages them for sale in the secondary market, thereby increasing the availability of money for educational loans
Student loan marketing association (Sallie Mae or SLMA)
A security representing an interest in a pool of conventional, VA, FHA or other agency mortgages. The pool received the principal and interest payments which it passes through to each certificate holder
Pass through certificate
Nations largest public power provider and a corporation of the US government, not backed by the US government. Backed by revenues generated by the agencies projects
Issues with maturities of 50 years
Tennessee valley authority (TVA)
