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Which of the Following Is False About Government Sponsored Enterprises

Question 22

Multiple Choice

Which of the following is false about Government Sponsored Enterprises (GSEs) and mortgage banks?


A) GSEs have greater interest rate risk than depository institutions.
B) GSEs and other large mortgage banks originate loans and sell or securitize these loans, receiving a profit.
C) More risky loans can be brought to the market by obtaining sufficient credit enhancement from other institutions involved in the securitization process, providing the securities with a higher credit rating.
D) U.S. GSEs including the Federal Home Loan Bank, the Federal National Mortgage Corporation, and the Government National Mortgage Association.
E) GSEs are funded through capital markets by issuing short and long-term agency debt securities.

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