ShmoopTube
Where Monty Python meets your 10th grade teacher.
Search Thousands of Shmoop Videos
Personal Finance Videos 520 videos
Finance: What is an Agency Bond? 2 Views
Share It!
Description:
What is an Agency Bond? Agencies bonds are issued by government agencies, not the treasury. The typical government bonds (T-bills, T-notes, and such) are issued and backed by the treasury or a municipality; these are not. They are still backed by the government though, issued specifically by the government agencies: Federal Housing Administration, Small Business Administration, and Government National Mortgage Association.
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Bonds
- Terms and Concepts / Credit
- Terms and Concepts / Econ
- Terms and Concepts / Investing
- Terms and Concepts / Muni Bonds
- Terms and Concepts / Stocks
- Terms and Concepts / Trading
Transcript
- 00:00
Finance allah shmoop What is an agency bond Okay the
- 00:06
federal government sells a lot of paper all the time
- 00:09
That is it exchanges a promise to pay investors of
- 00:13
thousand bucks in a year in return for nine hundred
- 00:16
seventy two dollars today those federally backed pieces of paper
Full Transcript
- 00:20
are back or guaranteed by the full faith and credit
- 00:23
of the us government's ability to tax it's poor hard
- 00:27
working and taxpaying citizens But inside of our massive government
- 00:31
exists all kinds of agencies particularly home and student and
- 00:35
you know other loan agencies who dole out money to
- 00:38
us citizens all the time Well fannie mae in her
- 00:42
brethren and while sister in is that a thing system
- 00:45
anyway her family of agencies while they issue paper as
- 00:48
well and they issue it separately from the federal government
- 00:52
And for the most part they're agency bonds look a
- 00:54
whole lot like federal bonds with one key exception They
- 00:57
are not backed by the federal government's full faith and
- 01:01
credit directly Rather they're just backed by the credit worthiness
- 01:04
of the agency itself backing them that is fannie mae
- 01:08
wants to raise cash for whatever more homes more loans
- 01:12
Blah blah blah It sells paper to the public and
- 01:14
institutions and whomever and promises to pay well basically with
- 01:18
a handshake That shake is based on its ability to
- 01:21
raise more money in the future or wine loudly enough
- 01:24
so that the federal government steps in and bails them
- 01:26
out If some one in a million crisis happens and
- 01:29
hello two thousand eight financial crisis we're looking at you
- 01:33
All right Well the basic idea here is that agency
- 01:35
bonds are backed by the agency itself not by the
- 01:38
full whammy of the full federal government so they generally
- 01:41
yield a skosh more interest to account for that scootch
- 01:45
more risk that investors take in buying them No Should
- 01:48
some other one in a million crisis ever happen again
- 01:52
So that's an agency bond not to be confused with
- 01:55
a bond agency which you know is the british secret 00:01:58.357 --> [endTime] service
Related Videos
GED Social Studies 1.1 Civics and Government
What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...
What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...
How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...