Which type of financial instrument is primarily used for investment in government-backed mortgages?

Mortgage-backed securities are designed specifically to pool together various mortgage loans and sell them as a single financial instrument. These securities are backed by government entities, such as Fannie Mae or Freddie Mac, which ensures a level of security as they carry a guarantee for the timely payment of principal and interest. Investors in mortgage-backed securities receive periodic payments that are generated from the underlying mortgage payments made by homeowners. This structure not only provides liquidity to the mortgage market but also allows for the investment in government-backed mortgages, making it a popular choice for those looking to invest in real estate without directly buying properties.

Corporate bonds, tax anticipation notes, and commercial paper serve different purposes in the financial world. Corporate bonds are issued by companies to raise capital, tax anticipation notes are short-term notes issued by municipalities in anticipation of future tax receipts, and commercial paper is a short-term financing tool for corporations to meet immediate financial needs. These instruments do not specifically cater to the investment in government-backed mortgages like mortgage-backed securities do.