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<br />MARKET VALUE: <br />The value at which a security is trading and <br />could presumably be purchased or sold <br />equal to price times face vilIue. <br />MASTER REPURCHASE <br />AGREEMENT: <br />A written contract.. covering designated <br />transactions between the parties to <br />repurchase and/or reverse repurchase <br />agreements that . establishes . each party's <br />rights in the transactions. A master <br />agreement will often specify, among other <br />things, the right of the buyer-lender to <br />liquidate the underlying securities in the <br />event of default by the seller-borrower. <br />MATURITY: <br />The date upon which the principal or stated <br />value of an investment becomes due and <br />payable. <br />MONEY ·MARKET: <br />The market in which short-term debt <br />instruments (bills, commercial paper, <br />bankers' acceptances, etc. ) are issued and <br />traded. <br />OFFER PRICE: <br />The price at which a security. is bought. <br />(When you are buying securities,· you ask <br />for an offer.) <br />OPEN MARKET OPERATIONS: <br />Purchases and sales of government and <br />certain other securities in the open market <br />by the New York Federal Reserve Bank as <br />directed by the FO M C in order to influence <br />the volume of money and credit in the <br />economy. Purchases inject reserves into the <br />bank system and stimulate growth of <br />money and credit; sales have the opposite <br />effect. Open market operations are the <br />Federal Reserve's most important and most <br />flexible monetary policy tool. <br />PORTFOLIO: <br />Collection of securities held by an investor. <br />PRIMARY DEALER: <br />A group of government securities dealers <br />who submit daily reports Of market activity <br /> <br />City of San Marcos Investment Policy <br /> <br />and positions and montWy financial <br />statements to the Federal Reserve Bank of <br />New York and are subject to its informal <br />oversight. Primary dealers include <br />Securities and Exchange Commission <br />(SEC)-registered securities broker.,.dealers, <br />banks, and a few unregulated firms. <br />PRUDENT PERSON RULE: <br />An investment standard stipulating <br />practices as conducted .by a prudent person <br />of . discretion and intelligence who is <br />seeking preservation of capital as well as <br />reasonable income. <br />QÚALIFIEDPUBLIC DEPOSITORIES: <br />A financial institution designated by the <br />Texas State Comptroller which does not <br />claim exemption from the payment of any <br />sales or compensating use or ad valorem <br />taxes under the laws of this state, which <br />has segregated for the benefit of the <br />commission eligible collateral having a <br />value of not less than its maximum liability <br />in order to act as a depository for public <br />funds. <br />RATE OF RETURN: <br />Commonly called current yield, annual <br />cash flow divided by replacement cost. <br />REPURCHASE AGREEMENT (RP OR <br />REPO): <br />A simultaneous buy-sell transaction in <br />which holder óf securities sells these <br />securities to an investor with an agreement <br />to repurchase them at a fixed price <br />including interest on a fixed date. Dealers <br />use RP extensively to finance their <br />positions. When the Fed is doing RP, it is <br />increasing bank reserves. <br />SAFEKEEPING: <br />A bank or trust service for a fee whereby <br />securities and valuables of all types and <br />descriptions are held by the banle <br />SECONDARY MARKET: <br />The market created by the purchase and <br />sale of outstanding issues following the <br />initial distribution (sale by issuer). <br /> <br />Page 11 <br />