Products & Their RisksQuestion 28 of 398
Fannie Mae and Freddie Mac are best described as:
a.Agencies of the U.S. Treasury Department
b.Foreign development banks
c.Municipal financing authorities
d.Government-sponsored enterprises (GSEs) whose securities are not directly guaranteed by the U.S. government
Explanation
Fannie Mae and Freddie Mac are government-sponsored enterprises that support the mortgage market; their securities carry slightly more credit risk than Treasuries because they are not directly backed by the U.S. government's full faith and credit. They are not Treasury agencies, foreign banks, or municipal authorities.
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