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<br />I <br /> <br />I <br /> <br />I <br /> <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 value. <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' 5 <br />nghts 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 Of stated <br />value of an investment bceomes due and <br />payable. <br />MONEY MARKET: <br />The market in which short-term debt <br />lTlstruments (bills, commercial paper, <br />bankers' acceptances, ete ) 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 securitJes in the open market <br />by the New York Federal Reserve Bank as <br />directed by the FOMe 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 arc the <br />Federal Reserve's most impoltant and mOSl <br />flexible monetary policy mol. <br />PORTFOLIO: <br />Collection of securities held by an investor. <br />PRIMARY DEALER: <br />A group of government securities <.leakrs <br />who submit daily reports of market actiVity <br /> <br />City of San Marcos lnvestment Policy <br /> <br />and pOSitIons and monthly financial <br />stalements to the Federal Reserve Bank of <br />Nc\-\' York and are subject to its infonnal <br />overSIght Primary dealers include <br />Securities and Exchange CommiSSIOn <br />(SEC)~regjstered 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 />QiJALlFIED PURue DEPOSITORIES: <br />A financial institution designated by the <br />Texas State Comptroller which does not <br />daim 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 hav ing a <br />value ornot less than its maximum liability <br />in order to act as a depository for publlc <br />funds. <br />RA TE 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 />whicb holder of securities sells these <br />securities to an investor with an agreement <br />10 repurchase them al 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 aU types and <br />descriptions are held by the bank <br />SECONDARY MARKET: <br />The market created by the purchase and <br />sale of outstanding issues following the <br />Initial dislnbutlOn {sale by Issuer). <br /> <br />Page 11 <br />