Interest on bonds issued by the ____________ are not exempt from state and local taxes.
a. Farm Credit System
b. Federal Home Loan Banks
c. Government National Mortgage Association (Ginnie Mae)
d. United States Postal Service
e. Student Loan Marketing Association (Sallie Mae)
Answer: C
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Bank Management
- Which of the following would not be considered a bank qualified municipal security?
- Banks can effectively improve their portfolios by:
- An investor can invest in either a tax-exempt security that pays 5% or a taxable corporate security of comparable risk and maturity that pays 8%. At what marginal tax rate will the investor be indifferent between these two securities?
- Securities with embedded options:
- The static spread is:
- As market rates rise, prepayment speed _______, while modified duration _________.
- A security might exhibit negative convexity because:
- Which of the following is not true regarding prepayments?
- A bond that has positive convexity:
- Which of the following is/are true?
- A bank owns a zero coupon bond with 5 years to maturity and a face value of $10,000. If interest rates increase from 6% to 7%, what is the approximate change in price, using Macaulay's duration?
- If the economy is entering into a recessionary period, you would expect the yield curve to be:
- If the Federal reserve is easing monetary policy at the end of a recession, you would expect the yield curve to be:
- Long-term interest rates tend to be higher than short-term interest rates:
- The yield curve tends to be inverted:
- A bank has a planned 2-year investment horizon. It is considering investing in a 2-year bond that pays 6% annually versus investing in a 4-year bond that pays 6.5% annually and then selling it after two years. The annual coupon payments can be reinvested at 4%.
- Riding the yield curve:
- Which of the following is considered an active investment strategy?
- A portfolio is equally invested in securities with 1-, 2-, and 3-years to maturity. Each year as the 1-year securities mature, the funds are reinvested in 3-year securities. This is an example of which investment strategy?
- Which passive investment strategy differentiates between bonds that have been purchased for liquidity versus income purposes?
- Municipal bonds whose primary source of repayment are the revenues from the underlying financed project are known as:
- Mortgage prepayment risk:
- Which of the following is not true regarding collateralized mortgage obligations (CMOs)?
- The underlying mortgages in Ginnie Mae mortgage pools include:
- Which of the following U.S. government agencies can borrow directly from the U.S. Treasury?