Secondary Securities Are Securities That Serve as Collateral for Primary

question 51

True/False

Secondary securities are securities that serve as collateral for primary securities.

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Definitions:

Underlying Asset

The financial asset upon which derivatives such as options and futures are based, determining their value.

Strike Price

The set price at which the holder of an options contract can buy (in a call option) or sell (in a put option) the underlying security or commodity.

Freddie Mac

Freddie Mac, short for the Federal Home Loan Mortgage Corporation, is a government-sponsored enterprise in the United States that provides a secondary market in home mortgages by purchasing mortgage loans from the lenders.

Ginnie Mae

A government-owned corporation within the United States Department of Housing and Urban Development that guarantees principal and interest payments on mortgage-backed securities.