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XVIII. GLOSSARY <br /> <br />AGENCIES: <br /> Federal agency securities and/or govern- <br /> ment-sponsored enterprises. <br />ASKED PRICE: <br /> The price at which securities are bought by <br /> the City. (When buying securities you ask <br /> for an offer.) <br />BANKERS' ACCEPTANCE (BA): <br /> A securitized draft or bill or exchange <br /> accepted by a bank or trust company. The <br /> accepting institution guarantees payment of <br /> the bill, as well as the issuer. <br />BID PRICE: <br /> The price at which securities are sold. <br /> (When you are selling securities, you ask <br /> for a bid.) <br />BROKER: <br /> A firm or person bringing buyers and <br /> sellers together for a fee. A Dealer may act <br /> as a broker. <br />CERTIFICATE OF DEPOSIT (CD): <br /> A bank time deposit evidenced by a <br /> certificate. Large-denomination CD's are <br /> typically negotiable. <br />COLLATERAL: <br />Securities, evidence of deposit or other <br />property which a borrower pledges to <br />secure repayment ora loan or pledged by a <br />bank to secure deposits of public monies. <br />Collateral for repurchase agreements are <br />owned not pledged by the counter-party <br />COMPREHENSIVE ANNUAL <br />FINANCIAL REPORT (CAFR): <br /> The official aamual report for the City of <br /> San Maa'cos. It includes five combined <br /> statements for each individual fund and <br /> account group prepared in conformity with <br /> GAAP. It also includes supporting <br /> schedules necessary to demonstrate <br /> compliance with finance-related legal and <br /> contractual provisions, extensive <br /> introductory material, and a detailed <br /> Statistical Section. <br /> <br />COUPON: <br /> (a) The mmual rate of interest that a bond's <br /> issuer promises to pay the bondholder on <br /> the bond's face value or rate on a CD. (b) <br /> A redeemable physical certificate attached <br /> to a physical bond evidencing interest due <br /> on a particular payment date. <br />DEALER: <br /> A dealer acts as a principal in all <br /> transactions, buying and selling for his own <br /> account. A dealer may broker a trade not <br /> from his/her portfolio. <br />DEBENTURE: <br /> A bond secured only by the general credit <br /> of the issuer. <br />DELIVERY VERSUS PAYMENT: <br /> Delivery of book~entry securities with a <br /> simultaneous exchange of money for the <br /> securities for control. <br />DELIVERY VERSUS RECEIPT: <br /> Delivery of securities with an exchange of <br /> a signed receipt for the securities. <br />DERIVATIVES: <br /> (1) Financial instruments whose return <br /> profile is derived from one or more <br /> underlying index or security (interest rates, <br /> foreign exchange rates, equities or <br /> commodities), and may include a <br /> leveraging factor, or (2) financial contracts <br /> derived from aaa underlying index or <br /> security. <br />DISCOUNT: <br /> (a) The difference between the settlement <br /> cost price of a security and its face value at <br /> maturity when priced at lower than face <br /> value. (b) A security selling at a discount. <br />DISCOUNT SECURITIES: <br /> Non-interest bearing securities sold at a <br /> discount, e.g., U.S. Treasury Bills, agency <br /> discount notes, and CP. <br />DIVERSIFICATION: <br /> Practice of using a variety of securities to <br /> spread risk. <br /> <br />City of San Marcos Investment Policy Page 9 <br /> <br /> <br />