26-23 GNMA pass-through bondholders can be protected against default risk by FHA/VA housing insurance.

Question

Quizplus · Accepted Answer

GNMA pass-through bonds are backed by a pool of mortgages, including those insured by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA). This insurance protects the bondholders against default risk, as the government agency will step in to cover any losses in the event of mortgage defaults. Therefore, option A is correct.

26-23 GNMA Pass-Through Bondholders Can Be Protected Against Default Risk