Ordinance 1903-92 - Laserfiche WebLink

II GLOSSARY BANKERS ACCEPTANCES (BAs) are drafts or bills or exchanges accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BAs are short-term, no interest-bearing notes sold at a discount and redeemed by the accepting bank at maturity for full face value. These notes trade at a rate equal to or slightly higher than Certificates of Deposit (CDs) , depending on market supply and demand. CERTIFICATES OF DEPOSIT (CD) are issued against funds deposited in a bank for a definite period of time and earning a specified rate of return. Certificates of Deposit bear rates of interest in line with money market rates current at the time of issuance. CREDIT RISK is the risk that another party to an investment transaction will not fulfill its obligations. Credit risk can be associated with the issuer of a security, a financial institution holding the City's deposit, or a third party holding securities or collateral. DELIVERY VERSUS PAYMENT is the delivery of securities with an exchange of money for the securities. FEDERAL FUNDS RATE is the rate of interest at which Federal Funds are traded between banks. Federal funds are excess reserves held by banks that desire to invest or lend them to banks needing reserves. The particular rate is heavily influenced through the open market operations of the Federal Reserve Board. LIQUIDITY refers to the ease and speed with which an asset can be converted into cash without a substantial loss in value. MARKET RISK is the risk that the market value of an investment, collateral protecting a deposit, or securities underlying a repurchase agreement will decline. MARKET VALUE is the price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT is an agreement which is controlling over all transactions covered by it on an open- ended basis. A new contract is not required for each new transaction.