Future Business Leaders of America (FBLA) Securities and Investments Practice Test

What does GNMA stand for?

1. Government National Mortgage Association

2. General National Money Agency

3. Government Net Mortgage Assets

4. Growth National Mortgage Association

The correct answer is: Government National Mortgage Association

The correct answer is "Government National Mortgage Association." GNMA is a government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that was established to help increase the availability of mortgage funds for low- and moderate-income households. It accomplishes this by providing a guarantee on mortgage-backed securities (MBS) that are backed by government-insured or government-guaranteed loans, such as those insured by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA). This guarantee helps to lower the risk for investors, making it more attractive for them to invest in these securities. In turn, this helps provide liquidity to the housing market, facilitating home purchases and support for borrowers. Other options, while they may sound plausible, do not accurately reflect the functions or official designations pertaining to GNMA. For instance, "General National Money Agency" and "Government Net Mortgage Assets" do not correspond to any known financial institutions or concepts. "Growth National Mortgage Association" is also not a recognized name within the context of U.S. housing finance. Thus, "Government National Mortgage Association" is the only accurate choice that captures the essence of GNMA's role in the financial and housing markets.