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XVI. Glossary of Terms
AGENCIES: Investments offered through Federal DISCOUNT SECURITIES: Non-interest-bearing
Agencies. instruments that are issued or purchased at a
discount and redeemed at maturity for full face
ASKED: The price at which securities are offered. value, e.g., U.S. Treasury Bills.
BANKERS' ACCEPTANCE (BA): A draft, bill, or DIVERSIFICATION: Dividing funds among a
exchange accepted by a bank or trust company. The variety of investments allowing the investor to
accepting institution guarantees payment of the bill, spread risks to a broader issuer array.
as well as the issuer.
FEDERAL FARM CREDIT BANKS (FFCB): A
BID: The price offered by a buyer of securities. government-sponsored corporation that was created
in 1916 and is a nationwide system of banks and
BROKER: A broker brings buyers and sellers associations providing mortgage loans, credit, and
together for a commission. related services to farmers, rural homeowners, and
agricultural and rural cooperatives. The banks and
CERTIFICATE OF DEPOSIT (CD): A time associations are cooperatively owned, directly or
deposit with a specific maturity evidenced by a indirectly, by their respective borrowers. The
certificate. Federal Farm Credit System is supervised by the
Farm Credit Administration, an independent agency
COLLATERAL: Securities, letters of credit, or of the U.S. government.
other properties pledged to secure deposits of public
monies. FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC): A federal agency that
ANNUAL FINANCIAL REPORT: The official insures bank deposits, currently up to $250,000 per
annual report for the City. It includes combined deposit.
statements for each individual fund and account
group prepared in conformity with GAAP. It also FEDERAL FUNDS RATE: The rate of interest at
includes supporting schedules necessary to which Fed funds are traded. This rate is currently
demonstrate compliance with finance related legal pegged by the Federal Reserve through open-
and contractual provisions, extensive introductory market operations.
material, and a detailed Statistical Section.
FEDERAL HOME LOAN BANKS (FHLB):
COUPON: The annual rate of interest that an issuer Government-sponsored wholesale banks which
promises to pay the debtholder on the debt's face lend funds and provide correspondent banking
value. Usually paid semi-annually. services to member commercial bank, thrift
institutions, credit unions and insurance companies.
DEALER: A dealer acts as a principal in all The mission of the FHLBs is to liquefy the housing
transactions, buying and selling for his own related assets of its members who must purchase
account. stock in their district Bank.
DEBENTURE: An unsecured bond or debt. FEDERAL HOME LOAN MORTAGE
CORPORATION (FHLMC or Freddie Mac): A
DELIVERY VERSUS PAYMENT: Delivery U.S. government-sponsored private corporation
versus payment is delivery of purchased securities whose chief function is to supply funds for home
with a simultaneous exchange of money as payment mortgages through continuous purchases of
for the securities executed through a third party mortgages from lending institutions. On September
safekeeping agent. 7, 2008, the Federal Housing Finance Agency
(FHFA), announced that Fannie Mae and Freddie
DISCOUNT: The difference between the purchase Mac were being placed into conservatorship of the
price of a security and its face value at maturity FHFA. The action was "one of the most sweeping
when purchase price is less than face value. government interventions in private financial
City of Bedford, TX | Adopted Budget FY 2025-2026 Page 608
