HomeMy Public PortalAbout2017.013 (02-07-17)INVESTMENT ENT POLICY
EXHIBIT
GLOSSARY
ACCRETION: : Adjustment of the difference between the price of a bond bought at an
original discount and the par value of the bond.
AGENCIES: Federal agency securities and/or Government-sponsored enterprises
(GSEs), also known as U.S. Government instrumentalities. Securities issued b
Government [rational Mortgage Association GNMA are considered true agency
securities, backed by the full faith and credit of the U.S. Government. GSEs are
financial intermediaries established by the federal government to fund loans to certain
groups of borrowers, for example homeowners, farmers and students and are privately
owned corporations with a public purpose. The most common GSEs are Federal Farm
Credit System Banks, Federal Horne Loan Banks, Federal Horne Loam Mortgage
Association, and Federal [National Mortgage Association.
AMORTIZATION: ATION: Accounting procedure that gradually reduces the cost value of
limited life or intangible asset through periodic charges to income. For fixed assets, the
term used i "depreciation". It is common practice to amortize any premium over par
value paid in the purchase of preferred stock or bond investments.
APPRECIATION: Increase in the value of ars asset such as a stock bond, commodity r
real estate.
ASKED PRICE: The price a brokerdealer offers to sail securities.
ASSET BACKED: A type of security that is secured by receivables, such as credit card
and auto loans. These securities typically pay principal and interest monthly.
BANES' ACCEPTANCE BA: A draft or bill or exchange accepted by ar bank or
trust company. The accepting institution guarantees parent of the bill, as well ars the
issuer. This money market instrument is used to finance international trade.
BASIS POINT: One-hundredth of one percent i.e., 0.01%).
BENCHMARK: A comparative base for measuring the performance or risk tolerance of
the investment portfolio. A benchmark should represent a close correlation to the level
of risk and the average duration of the portfolio's investment.
BID PRICE: The price a broker/dealer offers to purchase securities.
BOND: A financial obligation for which the issuers promises to pair the bondholder a
specified stream of future cash flows, including periodic interest payments and a
principal repayment.
BOOK HATE of RETURN: N: A measure of a portfolio's performance over time. It is the
internal rate of return which equates the beginning value of the portfolio with the ending
value, and includes interest earnings and realized gains and losses on the portfolio.
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BOOK VALUE: The value at which a debt security is shown on the holder's balance
sheet. Book value is acquisition cost less amortization of premium or accretion of
discount.
BROKER: A broker acts as an intermediary between a buyer and seller for a
commission and does not trade for leis/her own risk and account or inventory.
CALLABLE SECURITIES: A security that can be redeemed by the issuer before the
scheduled maturity date.
CASH FLOW: An analysis of all charges than affect the cash account during a specified
period.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by
a certificate. Large -denomination CD's are typically negotiable.
COLLATERAL: Securities, evidence of deposit or other property which a borrower
pledges to secure repayment of ar Ian. Also refers to securities pledged by a bank to
secure deposits of public monies.
COLLATERALIZED MORTGAGE OBLIGATION (CMO): A type of mortgage-backed
security that creates separate pools of pass-through rates for different classes of
bondholders with varying maturities, called tranches. The repayments from the pool of
pass-through securities are used to retire the bonds in the order specified by the bonds'
prospectus.
COMMERCIAL PAPER: Short-term, unsecured, negotiable promissory notes of
corporations.
COMMERCIAL RECEIVABLES: ABLES: Business debt owed to a creditor which may be used
as collateral for asset backed securities. These receivables include equipment leases,
building leases, and other business loans.
COMPREHENSIVE Al NUAL FINANCIAL REPORT T AFI : The official annual
financial report for the City. It includes combined statements and basic financial
statements for each individual fund and account group prepared in conformity with
Generally Accepted Accounting Principles (GAAP).
CONDUIT FINANCING: A financing in which a governmental agency issues debt and
the proceeds of the issue are loaned to a nongovernmental borrower who then applies
the proceeds for a project financing or if permitted by federal tax lavers for a qualified
501 bond) for working capital purposes.
CONSUMER RECEIVABLES: Consumer debt owed to a creditor which may be used
as collateral for asset backed securities. These receivables include credit card, auto,
and home equity loans.
CORPORATE NOTE: Debt instrument issued by a private corporation.
COUPON: The annual rate at which a bond pays interest.
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CREDIT ANALYSIS: An analysis of the economic and financial conditions to determine
creditworthiness or the ability to meet debt obligations.
CREDIT RATINGS: S: grade given to a debt instrument that indicates its credit quality.
Private independent rating services su h as standard & P or's, Moody's Moody'and Fitch
provide these evaluations of the issuer's financial strength, or its ability to pay principal
and interest in a timely fashion. High graded credit ratings are as follows:
Moody'Moody's
standard & P oes
Fitch
Long
Tern
short
Term
Long
Tera
short
Term
Long
Terra
Short
Term
Aaa
P1
AAA
A1+
AAA
A1+
l
AAS-
AA+
Aa2
AA
AA
Aa
-
AA -
Al
A+
Al
+
A
Baal
BBB
BBB+
CREDIT DISE(: The risk that an obligation will not be paid and a loss will result due to a
failure of the issuer of a security.
CUSIP: Stands for Committee n Uniform securities Identification Procedures. A
CUSIP number identifies most securities, including; stocks s f all registered U.S. and
Canadian companies, and U.S. government and municipal bonds. The CUSIP system
owned by the American Bankers Association and operated by standard & Pr's
facilitates the clearing and settlement process of securities. The number consists of nine
characters (including letters and numbers) that uniquely identify a company or issuer
and the type of security.
CURRENT YIELD: The annual interest on an investment divided by the current market
value. since the calculation relies on the current market value rather than the investor's
cost, current yield is unrelated to the actual return the investor will earn if the security i
held to maturity.
CUSTODIAN: A bark or other financial institution that keeps custody of stook
certificates and other assets.
DEALER: A dealer: as opposed to a broker, acts as a principal in all transactions,
buying and selling for his/her own risk and account or inventory.
DEBENTURES: A bond secured only by the general credit of the issuers.
DEFEASED BOND ISSUES: Issues that have sufficient money to retire outstanding
debt when due, so that the agency is released from the contracts and covenants in the
bond documents.
DELIVERY Y VERSUS PAYMENT (DIP): Delivery of securities with a simultaneous
exchange f money for the securities.
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DERIVATIVE: E: A financial instrument that is based on, or derived from, some underlying
asset, reference date, or index.
DIRECTISSUER: : Issuer markets its own paper directly to the investor without use of an
intermediary.
DISCOUNT: The difference between the cost of a security and its value at maturity
when quoted at lower than face value.
DIVERSIFICATION: Dividing investment funds among a variety of securities offering
independent returns and risk profiles.
DURATION: A measure of the timing of the cash flows, such as the interest payments
ents
and the principal repayment, to be received from a given fined -income security. This
adulation is based on three variables: term to maturity, coupon rate, and yield to
maturity. Duration measures the price sensitivity of a bond to changes in interest rates.
EARNED INCOME YIELD THIS PERIOD (annualized): The Total net Earnings this
period divided by Average Daily Portfolio Balance and the number of days in the period,
multiplied by 365 r 360 depending on the profile setting), and thea multiplied by 100.
FACEVALUE: The principal amount owed on a debt instrument. It is the amount on
which interest is computed and represents the amount that the issuer promises to pay at
maturity.
FAIR VALUE: The amount at which a security could be exchanged between willing
parties, other than in a forced or liquidation sale. If a market price is available, the fair
value is equal to the market value.
FANNIE MAE: Trade name for the Federal National Mortgage Association (FNMA), a
U.S. Government sponsored enterprise.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that
provides insurance on bank deposits, guaranteeing deposits to a set limit per account,
currently $100,000.
FEDERAL FARM CREDIT BANK (FFCB): Government-sponsored enterprise that
consolidates the financing activities of the Federal Land Banks, the Federal Intermediate
Credit Banks and the Banks for Cooperatives. Its securities do not carry direct U.S.
government guarantees.
FEDERAL FUNDS DATE: The rate of interest at which Federal funds are traded. This
rate is considered to be the most sensitive indicator of the direction of interest rates, as it
is currently pegged by the Federal Reserve through open -market operations.
FEDERAL GOVERNMENT AGENCY SECURITIES: Federal Agency or United States
government-sponsored enterprise obligations, participations, or other instruments,
including those issued by or fully guaranteed as to principal and interest by federal
agencies or United Statesgovernment-sponsored enterprises.
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FEDERAL HOME LOAN BANKS (FHLB): Government sponsored enterprise (currently
made up of 12 regional banks) that regulates and lends funds and provides
correspondent banking services to member commercial banks, thrift institutions, credit
unions and insurance companies. Although the banks operate under federal charter
with government supervision, the securities are not guaranteed by the U. S.
Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ATION FHLMC : Government
sponsored enterprise that helps maintain the availability of mortgage credit for residential
housing. FHLMC finances these operations by marketing guaranteed mortgage
certificates and mortgage participation certificates. Its discount notes and bends de not
carry direct U.S. government guarantees.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): Government sponsored
enterprise that is the largest single provider of residential mortgage funds in the United
States. FNMA is a private stockholder -owned corporation. The corporation's purchases
include a variety of adjustable mortgages and second loans, in addition to fined -rate
mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA
securities do not carry direct U.S. Government guarantees.
FEDERAL. OPEN MARKET COMMITTEE FOMD : A committee of the Federal
Deserve Board, which establishes monetary policy and executes it through temporary
and permanent changes to the supply of bank reserves.
FEDERAL RESERVE E SYSTEM: The central bank of the U.S. which consists of a seven
member Board of Governors, 12 regional banks and about 5,700 commercial banks that
are members,
FED WIRE: A wire transmission service established by the Federal Reserve erve Bank to
facilitate the transfer of funds through debits and credits of funds between participants
within the Fed system.
F} EDDIE MAC: Trade name for the Federal Hone Loan Mortgage Corporation
(FHLMC), a U.S. government sponsored enterprise.
FITDH INDIVIUAL BANK RATINGS: S: Individual Ratings are assigned to banks that are
legal entities. These ratings, which are internationally comparable, attempt to assess
how a bank would be viewed if it were entirely independent and could not rely on
eternal support. These ratings are designed to assess a bank's exposure to, appetite
for, and management of risk, and thus represent the agency's view on the likelihood that
it would run into significant financial difficulties such that it would require support. The
ratings are as follows.
A. A very strong bank - Characteristics may include outstanding profitability and
balance sheet integrity, franchise, management, operating environment or
prospects.
B. A strong bank - Thea are no major concerns regarding the bank.
Characteristics may include strong profitability and balance sheet integrity,
franchise, management, operating environment or prospects.
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C. An adequate bank, which, however, possesses one or more troublesome
aspects. There may be some concerns regarding its profitability and balance
sheet integrity, franchise, management, operating environment or prospects
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D.. A bank that has weaknesses of internal and/or eternal origin. There are
concerns regarding its profitability and balance sheet integrity, franchise,
management, operating environment or prospects. Barks in emerging
markets are necessarily faced with a greater number of potential
deficiencies of eternal origin.
E. A bank with very serious problems, which either requires or is likely t
require external support.
F. A bark that has either defaulted or, in Fitch Ratings' s' opinion, would have
defaulted if it had not received external support. Examples of such support
include state or local government support, (deposit) insurance funds,
acquisition by some other corporate entity or an injection of new funds from
its shareholders or equivalent.
/Vote: Gradations may be used among the ratings A to E: i.e. AIB, BIC, CID, and DIE.
No gradations apply to the F rating.
GINNIE IVIAE: Trade name for the Government National Mortgage Association GNI IA ,
a direct obligation bearing the full faith and credit of the U.S. Government.
GOVERNMENT T ADDOUNTIN STANDARDS DS BOAT D (GASB): A standard-setting
body, associated with the Financial Accounting Foundation, which prescribes standard
accounting practices for governmental units.
GUARANTEED INVESTMENT ENT CONTi A TS (GICs): An agreement acknowledging
receipt of funds, for deposit, specifying terms for withdrawal, and guaranteeing a rate of
interest to be paid.
INACTIVE E DEPOSITS: Funds not immediately needed for disbursement.
INTEREST RATE: The annual yield earned on an investment, expressed as a
percentage.
INTEREST DATE RISK: The risk of gain or loss in market values of securities due to
changes in interest -rate levels. For example, rising interest rates will cause the market
value of portfolio securities to decline.
INVESTMENT AGREEMENTS: ENTS: contract providing for the lending of issuer funds to a
financial institution which agrees to repay the funds with interest under predetermined
specifications.
INVESTMENT GLADE (LONG TERM RATINGS): : The minimum, high quality ratings
for long tern debt such ars corporate notes. Investment Grade ratings are as follows:
A3 Moody's, A -(S&P), and - (Fitch).
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INVESTMENT PORTFOLIO: A collection of securities held by a bank, individual,
institution or government agency for investment purposes.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash with
minimum risk of principal.
LOCAL AGENCY INVESTMENT FUND LAIF : An investment pool sponsored by the
State of California and administered/managed by the state Treasurer. Local
government units, with consent of the governing body of that agency, may voluntarily
deposit surplus funds for the purpose of investment. Interest earned is distributed by the
State Controller to the participating governmental agencies on a quarterly basis.
LOCAL AGENCY INVESTMENT POOL: A pooled investment vehicle sponsored by a
local agency or a group of local agencies for use by other local agencies.
MARK To MARKET: Current value of securities at today's market price.
MARKET RISK: : The risk that the value of securities will fluctuate with changes in
overall market conditions or interest rates. Systematic risk of a security that is common
to all securities of the same general class stock, bonds, notes, money market
instruments) and cannot be eliminated by diversification (which may be used to eliminate
non-systematic risk.
MARKET VALUE: The price at Which a security is currently being sold in the market.
See FAIR VALUE.
MASTER REPURCHASE AGREEMENT: A written contract covering all future
transactions between the parties to repurchase agreements and reverse repurchase
agreements that establish each party's rights in the transactions. A master agreement
will often specify, among other things, the right of the buyer -leader to liquidate the
underlying securities in the evert of default by the sellar -borrower.
MATURITY: Th date that the principal or stated value of a debt instrument becomes
due and payable.
MEDIUM-TERM NOTES MTN : Unsecured, investment-grade senior debt securities
of major corporations which are sold in relatively small amounts either on a continuous
or an intermittent basis. MTNs are highly flexible debt instruments that can be structured
to respond to market opportunities or to investor preferences.
MODIFIED DURATION: The percent change in price for a 100 basis point change in
yields. This is a measure of a portfolio's or security's exposure to market risk.
MONEY MARKET: The market in which short term debt instruments Treasury Bills,
Discount Notes, Commercial Paper, Banker's Acceptances and Negotiable Certificates
of Deposit) are issued and traded.
MORTGAGED BACKED SECURITIES: A type of security that is secured by a
mortgage or collection of mortgages. These securities typically pair principal and
interest monthly.
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MUNICIPAL BONDS: Debt obligations issued by states and local governments and
their agencies, including cities, counties, government retirement plans, school districts,
state universities, sewer districts, municipally owned utilities and authorities running
bridges, airports and other transportation facilities.
MUTUAL FUND: An entity that pools money and can invest in a variety of securities
which are specifically defined in the fund's prospectus.
NEGOTIABLE CERTIFICATE of DEPOSIT: A large denomination certificate of
deposit which can be sold in the open market prior to maturity.
NET PORTFOLIO YIELD: Calculation in which the 366 -day basis equals the annualized
percentage of the sura of all Net Earning during the period divided by the sure of all
Average Daily Portfolio Balances.
NEW ISSUE: Terra used when a security is originally "brought" to market.
NOTE: A written promise to pay a specified amount to a certain entity on demand or on
a specified date.
OPEN MARKET OPERATIONS: Purchases and sales of government and certain other
securities in the open market by the New York Federal Reserve Bank as directed by the
F MC in order to influence the volume of money and credit in the economy. Purchases
inject reserves into the bank system and stimulate growth of money and credit: Sales
have the opposite effect. Open market operations are the Federal Reserve's most
important and most flexible monetary policy tool.
PARVALUE: The amount of principal which must be paid at maturity. Also referred to
as the face amount of a bond. See FADE VALUE.
PORTFOLIO: The collection of securities held by an individual or institution.
PREMIUM: !: The difference between the parr value of a bond and the cost of the bond,
when the cost is above par.
PRIMARY Y DEALER: A group of government securities dealers who submit daily reports
of market activity and positions and monthly financial statements to the Federal Reserve
Bank of New York and are subject to its informal oversight. These dealers are
authorized to buy and sell government securities in direct dealing with the Federai
Reserve Bank of New York in its execution of market operations to carry out U.S.
monetary policy. Such dealers must be qualified in terms of reputation, capacity, and
adequacy of staff and facilities.
PRIME E SHO T TERM RATING): : High quality ratings for short terra debt such as
commercial paper. Prime ratings are as follows: Pl I oody's , Al (S&P), and F1
(Fitch).
PRINCIPAL: The face value or par value of ar debt instrument, or the amount of capital
ingested in a given security.
PROSPECTUS: A legal document that must be provided to any prospective purchaser
of a new securities offering registered with the Securities and Exchange Commission
INVESTMENT E [T P LIC
that typically includes information on the issuer, the issuer's business, the proposed use
of proceeds, the experience of the issuer's management, and certain certified financial
statements (also known as an `official statement").
PRUDENT INVESTOR STANDARD: D: A standard of conduct for fiduciaries. Investments
shall be made with judgment and care --under circumstances then prevailing, which
persons of prudence, discretion and intelligence exercise in the management of their
own affairs, not for speculation, but for investment, considering the probable safety of
their capital ars well as the probable income to be derived.
PUBLIC DEPOSITS: A bank that is qualified under California law to accept a deposit of
public funds.
PURCHASE DATE: The data in which a security is purchased for settlement on that or
later date. Also known as the "trade date".
DATE of RETURN: 1 The yield which can be attained on a security based on its
purchase price or its current market price. Income earned on an investment,
expressed as a percentage of the cost of the investment.
REALIZED ED GAIN (OR Loss): Gain or loss resulting from the sale or disposal of a
security.
REGIONAL DEALER: A financial intermediary that buys and sells securities for the
benefit of its customers without maintaining substantial inventories of securities and that
is not a primary dealer.
REPURCHASE I CHASE AG EEMEC T (FSP or REPO): : A transaction in which a counterparty or
the Felder of securities e.. investment dealer) sells these securities to an investor e..
the City) with a simultaneous agreement to repurchase them at a fined date. The
security "buyer" e.g. the City) in effect leads the "seller" money for the period of the
agreement, and the terms of the agreement are structured to compensate the "buyer' for
this. Dealers use RP extensively to finance their positions. Exception: when the Fed is
said to be doing 1P, it is lending money, which i, increasing bank reserves.
REVERSE REPURCHASE AGREEMENT EEMENT F EI ERSE REPO): The opposite of a
repurchase agreement. A reverse repo is a transaction in which the City sells securities
to a counterparty .g. investment dealer) and agrees to repurchase the securities from
the counterparty at a fixed date. The counterparty in effect leads the seller e.g. the city)
money for the period of the agreement with terms of the agreement structured to
compensate the buyer.
ISIS: Degree of uncertainty of return on an asset.
SAFEKEEPING: A service which banks offer to clients for a fee, where physical
securities are held in the ban's vault for protection and book -entry securities are on
record with the Federal Reserve Banff or Depository Trust Company in the bank's name
for the benefit of the client. As agent for the client, the safekeeping bank settles
securities transactions, collects coupon payments, and redeems securities at maturity or
on call date, if called.
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SEC'U ITIES AND EXCHANGE COMMISSION SEC : Agency created by Congress t
protect investors in securities transactions by administering securities legislation.
SED RULE 15034: See UNIFORM NES' CAPITAL RULE.
SECONDARY MARKET: A market for the repurchase and resale of outstanding issues
following the initial distribution.
SECURITIES: Investment instruments such as notes, bonds, stocks, money market
instruments and other instruments of indebtedness or equity.
SETTLEMENT DATE: The date on which a trade is cleared by delivery of securities
against funds.
SPREAD: The difference between two figures or percentages. It may be the difference
between the bid (price at which a prospective buyer offers to pay) and asked (price at
which an owner offers to sell) prices of a quote, or between the amount paid when
bought and the amount received when sold.
STRUCTURED NOTE: A complex, fined income instrument, which pays interest, based
n a formula tied to other interest rates, commodities or indices. Examples include
"inverse floating rates, notes which have coupons that increase when other interest rates
are falling, and which fall when other interest rates are rising and `dual index floaters "f
which pay interest based on the relationship between two other interest rates, for
example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such
notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements.
STUDENT LOAN MARKET ASSOCIATION SLM : Government-sponsored
enterprise that purchases student loans from originating financial institutions and
provides financing to state student loan agencies. It provides a national secondary
market for federally -sponsored student loans and credit to participants in the post
secondary education lending sector.
SUBORDINATED DINATED DEBT: Debt over which senior debt has priority. In the event of a
bankruptcy, subordinated debt holders receive payment only after senior debt holders
are paid in full.
TIME DEPOSIT: A deposit with a California bank or savings and loan association for a
specific amount and with a specific maturity date and interest rate. Deposits of up to
100,000 are insured by FDIC. Deposits over $100,000 are collateralized above the
insurance with either g ove rn rn ent securities at I 10% of par value), first trust deeds at
150% of par value , or letters of credit at 105% of par value .
TOTAL DATE OF RETURN: A measure of a portfolio's performance over time. It is the
internal rate of return which equates the beginning value of the portfolio with the ending
value, and includes interest earrings and realized and unrealized gains and losses on
the portfolio. For bonds held to maturity, total return is the }yield to maturity.
TRUSTEE OR TRUST COMPANY OR TRUST DEPARTMENT OF A BANK: A
financial institution with trust powers which acts in a fiduciary capacity for the benefit of
the bondholders in enforcing the terms of the bond contract.
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UNDERWRITER: : dealer which purchases a new issue of municipal securities for
resale.
UNIFORM LVET CAPITAL RULE: Securities and Exchange Commission requirement
that member firms as well as nonmember broker/dealers in securities maintain a
maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and
net capital ratio. Indebtedness covers all money owed to a firm, including margin loans
and commitments to purchase securities, one reason new public issues are spread
among members of underwriting syndicates. Liquid capital includes cash and assets
easily converted into cash.
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by U.S. government
agencies, most of which are secured only by the credit worthiness of the particular
agency. See AGENCIES.
U.S. TREASURY Y BLI ATI INS: Securities issued by the U.S. Treasury and backed
by the full faith and credit of the United States. Treasuries are the benchmark for
interest rates on all other securities in the U.S. The Treasury issues both discounted
securities and fined coupon notes and bonds. The income from Treasury securities is
exempt from state and Iccal, but not federal, takes.
TREASURY Y BILLS: securities issued at a discount with initial maturities of one
year or less. The Treasury currently issues three-month and six-month Treasury
bills at regular weekly auctions. It also issues very short-term `cash
management" bills as needed to smooth out cash flows.
TREASURY NTES: Intermediate-term coupon -bearing securities with initial
maturities of one year to tern years.
TREASURY Y B 1D: Lang -terra coupon -bearing securities with initial maturities
f ten years or longer.
UNREALIZED AI ! (OR LOSS): Gain or loss that has not become actual. It becomes
a realized gain or loss) when the security in which thea is a gain or loss is actually sold.
See REALIZED ED GAI LOSS).
VOLATILITY: Characteristic of a security, commodity or market to rise or fall sharply in
price within a shoat -terra period.
WEIGHTED AVERAGE E MATU IT : The average maturity of all the securities that
comprise a portfolio that is typically expressed in days or years.
WEIGHTED AVERAGE YIELD AT THE END OF PERIOD: D: The summation of each
investment's period -end scheduled boob value multiplied by its ending sub -period yield
and divided by the total scheduled book value. Investments maturing on or before the
end date ofthe report period will not affect the weighted average yield.
WHEN ISSUED (W1): Short form of `4when, as, and if issued." WI refers to a
transaction made conditionally because a security, although authorized, has not yet
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been issued with the exception of neer Treasury, Agency, and Corporate issuances to
settle within 21 days.
YIELD: The annual rate of return on ars investment expressed as a percentage of the
investment. See CURRENT YIELD; YIELD TO MATURITY.
YIELD CURVE: Graph showing the relationship at a given point in time between yields
and maturity for bonds that are identical in every wary except maturity.
YIELD TO MATURITY: Concept used to determine the rate of return if an investment is
held to maturity. It tales into account purchase price, redemption value, time to
maturity, coupon yield, and the time between interest payments. it is the rate of income
return on ars investment, minus any premium or plus any discount, with the adjustment
spread over the period from the date of purchase to the date of maturity of the bond,
expressed as a percentage.
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