2017/03/08 Council Agenda Packet

and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL RESERVE SYSTEM - The central bank of the United States that has regulated credit in the economy since its inception in 1913. It includes the Federal Reserve Bank, 14 district banks and the member banks of the Federal Reserve, and is governed by the Federal Board. FINANCIAL INSTITUTIONS - Establishments that include the circulation of money, the granting of credit,the making of investments, and the provision of banking facilities. GOVERNMENT SECURITY-Any debt obligation issued by the U.S. government, its agencies or instrumentalities. Certain securities, such as Treasury bonds and Ginnie Maes, are backed by the government as to both principal and interest payments. Other securities, such as those issued by the Federal Home Loan Mortgage Corporation (FHLMC), or Freddie Mac, are backed by the issuing agency. LIQUIDITY- Refers to the ease and speed with which an asset can be converted into cash without a substantial loss in value. LOCAL GOVERNMENT INVESTMENT POOL (LGIP) -The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARK-TO-MARKET-An adjustment in the valuation of a securities portfolio to reflect the current market values of the respective securities in the portfolio. This process is also used to ensure that margin accounts comply with maintenance. MARKETABILITY-Ability to sell large blocks of money market instruments quickly and at competitive prices. MARKET RISK-The risk associated with declines or rises in interest rates which cause an investment in a fixed-income security to increase or decrease in value.The risk that the market value of an investment, collateral protecting a deposit, or securities underlying a repurchase agreement will decline. MARKET VALUE- The price at which a security is trading and could presumably be sold. MASTER REPURCHASE AGREEMENT-An agreement between the investor and the dealer or financial institution.This agreement defines the nature of the transactions, identifies the relationship between the parties, establishes normal practices regarding ownership and custody of the collateral securities during the term of the investment, provides for remedies in the event of a default by either party and otherwise clarifies issues of ownership. MATURITY - The time when a security becomes due and at which time the principal and interest or final coupon payment is paid to the investor. io City of Everett Investment Policy(2017) 24