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DEALER-A dealer,as opposed to a broker,acts as a principal in all transactions, buying <br /> and selling for his own account. <br /> DEFEASE-To discharge the lien of an ordinance, resolution, or indenture relating to a <br /> bond issue, and in the process, render inoperative restrictions under which the issuer <br /> has been obliged to operate. Comment: Ordinarily an issuer may defease an indenture <br /> requirement by depositing with a trustee an amount sufficient to fully pay all amounts <br /> under a bond contract as they become due. <br /> DELIVERY VS PAYMENT-There are two methods of delivery of securities: Delivery vs. <br /> payment and delivery vs. receipt (also called free). Delivery vs. payment is delivery of <br /> securities with an exchange of money for the securities. Delivery vs. receipt is delivery of <br /> securities with an exchange of a signed receipt for the securities. <br /> DEPOSITORY INSURANCE-Insurance on deposits with financial institutions. For <br /> purposes of this policy statement, depository insurance includes:a) Federal depository <br /> insurance funds, such as those maintained by the Federal Deposit Insurance <br /> Corporation (FDIC)AND Federal Savings and Loan Insurance Corporation (FSLIC); and b) <br /> Public Deposit Protection Commission. <br /> DISCOUNT- 1. (n.) selling below par;e.g., a $1000 bond selling for$900. 2. (v.) <br /> anticipating the effects of news on a security's value; e.g., "The market had already <br /> discounted the effect of the labor strike by bidding the company's stock down." <br /> DIVERSIFICATION - Dividing available funds among a variety of securities and <br /> institutions so as to minimize market risk. <br /> EFFECTIVE RATE -The yield you would receive on a debt security over a period of time <br /> taking into account any compounding effect. <br /> FACE VALUE-The value of a bond stated on the bond certificate;thus,the redemption <br /> value at maturity. Most bonds have a face value, or par,of$1,000. <br /> FEDERAL AGENCY SECURITIES - Several government-sponsored agencies, in recent <br /> years, have issued short and long-term notes. Such notes typically are issued through <br /> dealers, mostly investment banking houses.These Federal government-sponsored <br /> agencies were established by the U.S.Congress to undertake various types of financing <br /> without tapping the public treasury.In order to do so,the agencies have been given the <br /> power to borrow money by issuing securities, generally under the authority of an act of <br /> Congress.These securities are highly acceptable and marketable for several reasons, <br /> mainly because they are exempt from state, municipal and local income taxes. <br /> Furthermore, agency securities must offer a higher yield than direct Treasury debt of the <br /> same maturity to find investors, partly because these securities are not direct <br /> obligations of the Treasury. The main agency borrowing institutions are the Federal <br /> National Mortgage Association (FNMA),the Federal Home Loan Bank System (FHLB), <br /> and the Federal Farm Credit System (FFCS). <br />