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BASIS POINT-A measure of an interest rate, i.e., 1/100 of 1 percent, or .0001. <br /> BID -The indicated price at which a buyer is willing to purchase a security or <br /> commodity. When selling a security, a bid is obtained. (See Offer) <br /> BOOK ENTRY SECURITIES - U.S. government and federal agency securities that do <br /> not exist in definitive (paper) form; they exist only in computerized files maintained by <br /> the Federal Reserve Bank. <br /> BOOK VALUE - The amount at which an asset is carried on the books of the owner. <br /> The book value of an asset does not necessarily have a significant relationship to <br /> market value. <br /> BROKER -A broker brings buyers and sellers together for a commission paid by the <br /> initiator of the transaction or by both sides. <br /> CERTIFICATES OF DEPOSIT- Certificates of Deposit, familiarly known as CDs, are <br /> certificates issued against funds deposited in a bank for a definite period of time and <br /> earning a specified rate of return. Certificates of Deposit bear rates of interest in line <br /> with money market rates current at the time of issuance. <br /> COLLATERAL: Property (as securities) pledged by a borrower to protect the interest of <br /> the lender. <br /> COMPETITIVE BID PROCESS - A process by which three or more institutions are <br /> contacted via the telephone or email to obtain interest rates for specific securities. <br /> CREDIT QUALITY-The measurement of the financial strength of a bond issuer. This <br /> measurement helps an investor to understand an issuer's ability to make timely interest <br /> payments and repay the loan principal upon maturity. Generally, the higher the credit <br /> quality of a bond issuer, the lower the interest rate paid by the issuer because the risk <br /> of default is lower. Credit quality ratings are provided by nationally recognized rating <br /> agencies. <br /> CREDIT RISK- The risk that another party to an investment transaction will not fulfill its <br /> obligations. Credit risk can be associated with the issuer of a security, a financial <br /> institution holding the entity's deposit, or a third party holding securities or collateral. <br /> 9 I City of Everett Investment Policy(2017) <br />