Considering the Government-Sponsored Enterprises Like Freddie Mac, Fannie Mae, and Others

question 2

Essay

Considering the government-sponsored enterprises like Freddie Mac, Fannie Mae, and others, do you see any indication that the managers of these agencies are creating a moral hazard? Explain.

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Definitions:

IFRS

A collection of accounting principles formulated by the International Accounting Standards Board, known as International Financial Reporting Standards, that aid in the global creation of financial reports.

GAAP

Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards used in financial reporting within the United States.

Proprietorships

A business structure where a single individual owns and runs the business, bearing unlimited liability for its debts and obligations.

Partnerships

A business organization legally constituted by multiple individuals who jointly manage the enterprise and share in its profits.