Page 241 - Colleyville FY19 Budget

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) – FNMA, like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. It is a federal
corporation and the largest single provider of residential mortgage funds in the United
States. FNMA’s securities are highly liquid and widely accepted. FNMA assumes and
guarantees that all security holders will receive timely payment of principal and interest.

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) – Securities
influencing the volume of bank credit guaranteed by GNMA and issued by mortgage
bankers, commercial banks, savings and loan associations. Security holder is backed by
the full faith and credit of the US Government.

LIQUIDITY – An asset that can be converted quickly and easily to cash.

LOCAL GOVERNMENT INVESTMENT POOL – An investment by local governments in
which their money is pooled as a method for managing local funds.

MARKET VALUE – The price at which a security is trading and could presumably be
purchased or sold.

MASTER REPURCHASE AGREEMENT – A written contract that establishes each
party’s rights in the transactions. A master agreement will specify, among other things,
the right of the buyer-lender to liquidate the underlying securities in the event of default
by the seller-borrower.

MATURITY – The date upon which the principal or stated value of an investment becomes
due and payable.

MUTUAL FUND – An investment company that pools money and can invest in a variety
of securities, including fixed-income securities and money market instruments. Mutual
funds are regulated by the Investment Company Act of 1940 and must abide by Securities
and Exchange disclosure guidelines.

PORTFOLIO – Collection of securities held by an investor.

PRIMARY 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 informal oversight.

PRUDENT PERSON RULE – An investment standard outlining fiduciary responsibilities
of public funds investors relating to investment practices.

RATE OF RETURN – The yield obtainable on a security based on its purchase price or
its current market price.

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