Products & Their RisksQuestion 129 of 398
Freddie Mac (FHLMC) primarily:
a.Insures bank deposits up to the FDIC limit
b.Purchases mortgages and issues mortgage-backed securities to support the secondary mortgage market
c.Sets the federal funds target rate
d.Issues short-term Treasury bills on behalf of the government
Explanation
Freddie Mac is a government-sponsored enterprise that buys mortgages, mainly from thrift institutions, and pools them into mortgage-backed securities. Like Fannie Mae, it adds liquidity to the secondary mortgage market, and its securities are not directly backed by the U.S. government's full faith and credit.
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