Page 45 - CityofColleyvilleFY23AdoptedBudget

DISCOUNT SECURITIES – Non-interest bearing money market instruments that are being issued at a discount
and redeemed at maturity for full face value, e.g. Treasury
Bills.

DIVERSIFICATION – Dividing instruments among securities offering independent returns.

FEDERAL CREDIT AGENCIES – Agencies of the Federal government set up to supply credit to various classes of
institutions and individuals e.g. savings and loans, small business rms, students, farmers, farm cooperatives,
and exporters.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) – A federal agency that insures bank deposits, currently
up to $100,000 per deposit.

FEDERAL HOME LOAN BANKS (FHLB) – Government sponsored regional wholesale banks which lend funds
and provide correspondent banking services to member commercial banks, thrift institutions, credit unions
and insurance companies. `The mission of the FHLB is to liquefy the housing related assets of its members
who must purchase stock in their district bank.

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 in uencing 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
xed-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 nancial statements to the Federal Reserve Bank of New York and are subject to
informal oversight.

PRUDENT PERSON RULE – An investment standard outlining duciary 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.

City of Colleyville | Budget Book 2023 Page 45