FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) is a private corporation chartered by the U.S. Government that issues pass-through securities, known as participation certificates, based on conventional mortgages. FHLMC pass-throughs are traded in a very liquid market and are used as collateral for other activities such as repurchase agreements. FHLMC guarantees the timely payment of interest and ultimate payment of principal. FHLMC is commonly called "Freddie Mac".
BARTER SYSTEM see TRADE EXCHANGE.
LEVERAGE HYPOTHESIS is the theory that managers have incentive to avoid technical default of loan covenants because it could result in increases in the firm's cost of capital.
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