GNMA Pass-Throughs Can Assist an FI in Resolving Duration Mismatch

question 25

True/False

GNMA pass-throughs can assist an FI in resolving duration mismatch and illiquidity risk problems.

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Definitions:

Days

Units of time equivalent to 24 hours, representing one complete rotation of the Earth on its axis.

Term Deposit

A fixed-term investment held at a financial institution that pays interest at a specified rate and matures on a predetermined date.

Matures

The point in time when a financial instrument, such as a bond, CD, or loan, reaches its final due date and the principal is to be repaid.

Paying

The act of disbursing or settling a financial obligation.