26-66 Which of the Following Factors Occurred in the Early

question 42

Multiple Choice

26-66 Which of the following factors occurred in the early 2000s and created concerns about the ability of Fannie Mae and Freddie Mac to manage their portfolios of assets?

• A)Fannie Mae miscalculated the value of its mortgages that created a restatement of its stockholder equity.
• B)Both agencies overcharged lenders for services they provided.
• C)Fannie Mae operated for some time with a sharp increase in interest rate risk on its balance sheet.
• D)All of the above.
• E)Answers B and C only.

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Definitions:

Federal Income Tax

An annual financial burden placed by the U.S. federal government on the income of different entities including individuals, corporations, and trusts.

Personal Liability

The legal responsibility of an individual to settle debts or legal claims from their own assets.

Partnership's Obligations

The legal and financial duties that a partnership owes to others, including partners, creditors, and the public.

Income

Money or goods received, especially on a regular basis, as a result of labor, investments, or business activities.