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)B and C.
E)A and C.

Question

Quizplus · Accepted Answer

Federally sponsored agency debt is not legally insured by the U.S. Treasury, but it is generally assumed that the government would step in to prevent a default, hence B is correct. Additionally, these debts typically offer a small yield spread over U.S. Treasuries, making C correct as well.

Federally Sponsored Agency Debt