Describe the basic activities of Fannie Mae in the secondary mortgage market. How are these activities financed?
What will be an ideal response?
Answer: Fannie Mae purchases both conventional and government-underwritten residential mortgages from mortgage companies, commercial banks, savings and loan associations, and other approved lenders. Part of these acquired mortgages are combined into packages or mortgage pools, mortgage-backed securities are written against the pools, and the MBSs are then sold to investors. Another part of the acquired mortgages are "held in portfolio." The agency only needs to fund securitized loans until they are sold as securities. For loans held in portfolio its obtains funds for the acquisition of mortgages by obtaining (forward) commitment fees from originating lenders for loan purchases, by earning interest on its mortgage portfolio and other investments, and by selling notes and bonds to fixed-income investors.
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Suppose a bank purchases $50 of government securities using funds from reserves. How much do bank assets change as a result of this transaction?
In reference to short-term economic fluctuations, the "peak" refers to:
A. a period in which the economy is growing at a rate significantly above normal. B. the high point of economic activity prior to a downturn. C. a particularly strong and protracted expansion. D. the high point of economic activity prior to a recovery.
A table which shows the quantities of a particular good or service that producers are willing to sell (supply) at various prices is known as a supply:
A. schedule. B. graph. C. curve. D. figure.
The Congress of Industrial Organizations (CIO) was formed in 1938 by
A) John L. Lewis. B) Samuel Gompers. C) Walter Reuther. D) Ralph Nader.