Final answer:
Yes, GNMA pass-through certificates do pay interest. These certificates represent interests in a pool of mortgage loans that are guaranteed by the US government, and the interest paid is derived from the interest payments made by the borrowers on the underlying mortgage loans.
Step-by-step explanation:
Yes, GNMA pass-through certificates do pay interest. GNMA stands for Government National Mortgage Association, and these certificates represent interests in a pool of mortgage loans that are guaranteed by the US government. The interest paid on GNMA pass-through certificates is derived from the interest payments made by the borrowers on the underlying mortgage loans.
For example, let's say an investor owns a GNMA pass-through certificate that represents a share of a pool of mortgage loans with a total value of $1,000,000. If the interest rate on the mortgage loans is 5%, the investor would receive interest payments proportional to their share of the pool, which in this case would be $5,000.
In summary, GNMA pass-through certificates do pay interest to investors.