#FREDDIE MAC PMMS RATE FOR THE NORTHEAST REGION FOR 2011 DRIVERS#
For information about our interest-rate risk management activities and the sensitivity of our financial results to interest-rate volatility, see "MD&A - Consolidated Results of Operations - Derivative Gains (Losses) - Explanation of Key Drivers of Derivative Gains (Losses)", "MD&A - Consolidated Results of Operations - Other Key Drivers - Items Affecting Multiple Lines - Debt Funding Strategies and Interest-Rate Risk Management Activities," and "MD&A - Risk Management - Market Risk." This volatility generally is not indicative of the underlying economics of our business. Based upon the composition of our financial assets and liabilities, including derivatives, at December 31, 2016, we generally recognize fair value losses in earnings when interest rates decline.
However, the way we account for our financial assets and liabilities (i.e., some are measured at amortized cost, while others are measured at fair value), including derivatives, creates volatility in our GAAP earnings when interest rates fluctuate. Through our use of derivatives, we manage our exposure to interest-rate risk on an economic basis to a low level as measured by our models.
We hold assets and liabilities that expose us to interest-rate risk.
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