Asked by Cassandra Myers on Apr 27, 2024
Verified
Federally-sponsored agency debt
A) is legally insured by the U.S. Treasury.
B) would probably be backed by the U.S. Treasury in the event of a near-default.
C) has a small positive yield spread relative to U.S. Treasuries.
D) would probably be backed by the U.S. Treasury in the event of a near-default and has a small positive yield spread relative to U.S. Treasuries.
E) is legally insured by the U.S. Treasury and has a small positive yield spread relative to U.S. Treasuries.
Federally-Sponsored Agency Debt
Securities issued by government-sponsored enterprises to finance activities benefiting the public, with varying degrees of government backing.
Yield Spread
The difference between the yields on varying debt instruments, usually of different credit qualities or maturing at different times.
U.S. Treasuries
Short for United States Treasury securities, which are government debt instruments issued by the U.S. Department of the Treasury to finance government spending.
- Determine the parts and instruments involved in the money market.
- Familiarize yourself with significant interest rates operating in financial markets and their influence.
Verified Answer
RT
radhika tangriMay 02, 2024
Final Answer :
D
Explanation :
Federally-sponsored agency debt is not legally insured by the U.S. Treasury, but it is generally believed that the U.S. Treasury would back it in the event of a near-default. Additionally, this type of debt typically has a small positive yield spread relative to U.S. Treasuries, reflecting slightly higher risk.
Learning Objectives
- Determine the parts and instruments involved in the money market.
- Familiarize yourself with significant interest rates operating in financial markets and their influence.