Discuss Whether the Following Statement Is True or False

question 14

True/False

Discuss whether the following statement is true or false:
A GNMA (mortgage pool)security with a 20-year maturity should sell at a lower yield to maturity than a 20-year corporate bond,because the interest and principal of the GNMA security are government insured.

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Definitions:

Incomes

Earnings accrued, especially periodically, from labor or investment gains.

Freedom To Farm Act

A U.S. federal law enacted in 1996 aimed at allowing farmers greater management flexibility in what they plant and produce.

Agricultural Price Supports

Government interventions to stabilize or increase agricultural product prices through mechanisms such as subsidies or purchase commitments.

Acreage Allotments

A pre-1996 government program that limited the total number of acres to be used in producing (reduced amounts of) various food and fiber products and allocated these acres among individual farmers. These farmers had to limit their plantings to the allotted number of acres to obtain price supports for their crops.