Products & Their RisksQuestion 167 of 398
An agency debenture issued by a GSE such as the Federal Home Loan Bank is:
a.An unsecured debt obligation of the agency, backed by its general credit rather than a specific mortgage pool
b.A tax-exempt municipal security
c.A share of ownership in the agency
d.A federally insured bank deposit
Explanation
Some agency securities are debentures, meaning unsecured bonds backed by the issuing agency's general creditworthiness rather than a pool of mortgages. They are considered high quality but, as GSE obligations, they are not directly guaranteed by the U.S. government, so they yield slightly more than Treasuries. They differ from mortgage-backed pass-throughs, whose cash flow comes from underlying loans.
Practice all 398 questions free — no signup required.
Related questions on this topic
- Interest from certain 'private activity' municipal bonds may be:
- Some municipal bonds, such as Build America Bonds, are TAXABLE at the federal level because:
- A prepaid tuition plan, a type of 529 plan, primarily allows a family to:
- A key risk unique to owning a CMO compared with a plain Treasury bond is:
- An investor holding long-term fixed-rate bonds is most concerned about purchasing-power risk, which means:
- A broad market decline during a recession causes almost every stock in a diversified portfolio to fall. This is an example of:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review