Which of the following statements is true concerning Government National Mortgage Association (Ginnie Mae) securities?

Ginnie Mae securities actually pay interest monthly, not semiannually. This monthly interest payment schedule is typical for mortgage-backed securities, providing investors with more frequent income compared to traditional bonds that may offer semiannual interest payments.

While the interest from Ginnie Mae securities is subject to federal income tax, it is not exempt from state and local taxes. This differentiates Ginnie Mae securities from some municipal bonds, which typically enjoy tax-exempt status at the state and local levels.

This statement is incorrect as Ginnie Mae securities are not guaranteed by Fannie Mae. Instead, Ginnie Mae is a separate entity that provides guarantees on its own securities, which are backed by the full faith and credit of the U.S. government, distinct from the guarantees provided by Fannie Mae.