FNMA Has Direct Holdings of 30-Year Fixed-Rate Mortgages Financed by Three-

question 2

Essay

FNMA has direct holdings of 30-year fixed-rate mortgages financed by three- to five-year agency securities sold to the public.
What kind of interest rate swap could FNMA use to limit their interest rate risk? Explain.

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Definitions:

Collarbone (Clavicle)

A bone located horizontally across the front of the shoulder, connecting the arm to the body.

Primates

An order of mammals that includes humans, apes, monkeys, and prosimians, characterized by large brains, forward-facing eyes, and opposable thumbs.

Flexible Movements

Refers to the adaptability and versatility of physical actions or maneuvers, often highlighting the ability to respond to different challenges or environments.

Firm Posture

A stance or position that is physically steady, confident, or determined.