Securities Industry Essentials (SIE) Diagnostics Practice Test 2026 - Free SIE Practice Questions and Study Guide

Ginnie Mae's backing implies that its securities are considered government-backed securities with low default risk. This is because Ginnie Mae, or the Government National Mortgage Association (GNMA), guarantees the timely payment of principal and interest on its mortgage-backed securities (MBS). As a government-sponsored enterprise, Ginnie Mae is backed by the full faith and credit of the U.S. government, providing a safety net for investors.

This backing significantly reduces the default risk associated with these securities, making them an attractive option for risk-averse investors. The guaranteed payments help to assure investors that they will receive their returns even if underlying loans default. Consequently, Ginnie Mae securities are often seen as safe investments, especially in comparison to other higher-risk assets.

In contrast, higher yields than corporate stocks, higher risk exposure, and real estate depreciation risk do not accurately characterize Ginnie Mae’s securities, as they are typically associated with increased risk and potential for higher returns, which is not the case with securities backed by Ginnie Mae.