The Net Effect of Government Supported Organizations Such as Fannie

question 10

Multiple Choice

The net effect of government supported organizations such as Fannie Mae,Ginnie Mae,and Freddie Mac is to:

• A)To broaden credit and offer it at a cheaper rate than might otherwise prevail.
• B)To narrow credit but offer it at a cheaper rate than might otherwise prevail.
• C)To broaden credit but offer it at a more expensive rate than might otherwise prevail.
• D)To narrow credit and offer it at a more expensive rate than might otherwise prevail.
• E)None of the above.

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Definitions:

Cost of Capital

The cost of capital represents the return rate that investors expect of a company to generate from its projects to be worth the risk of the investment.

Accountants

Professionals who manage and examine financial records for individuals, companies, or organizations.

Economists

Professionals who study the production, distribution, and consumption of goods and services, analyzing how economies work and how economic agents interact.

Opportunity Costs

Represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.