Info

1,461

Sources: Federal Reserve Flow of Funds Accounts; Federal Reserve Bulletin; Banking and Monetary Statistics, 1941-1970. http://www federalreserve.gov/releases/z1

Sources: Federal Reserve Flow of Funds Accounts; Federal Reserve Bulletin; Banking and Monetary Statistics, 1941-1970. http://www federalreserve.gov/releases/z1

Stocks. Stocks are equity claims on the net income and assets of a corporation. Their value of $11 trillion at the end of 2002 exceeds that of any other type of security in the capital market. The amount of new stock issues in any given year is typically quite small—less than 1% of the total value of shares outstanding. Individuals hold around half of the value of stocks; the rest are held by pension funds, mutual funds, and insurance companies.

Mortgages. Mortgages are loans to households or firms to purchase housing, land, or other real structures, where the structure or land itself serves as collateral for the loans. The mortgage market is the largest debt market in the United States, with the amount of residential mortgages (used to purchase residential housing) outstanding more than quadruple the amount of commercial and farm mortgages. Savings and loan associations and mutual savings banks have been the primary lenders in the residential mortgage market, although commercial banks have started to enter this market more aggressively. The majority of commercial and farm mortgages are made by commercial banks and life insurance companies. The federal government plays an active role in the mortgage market via the three government agencies—the Federal National Mortgage Association (FNMA, "Fannie Mae"), the Government National Mortgage Association (GNMA, "Ginnie Mae"), and the Federal Home Loan Mortgage Corporation (FHLMC, "Freddie Mac")—that provide funds to the mortgage market by selling bonds and using the proceeds to buy mortgages. An important development in the residential mortgage market in recent years is the mortgage-backed security (see Box 1).

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