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.

Question

Quizplus · Accepted Answer

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.

Federally-Sponsored Agency Debt