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OPTION: Right to buy or sell property that is granted in exchange for an agreed upon sum. If the right is not
<br />exercised after a specified period, the option expires and the option buyer forfeits the money. [Referenced
<br />page: 33]
<br />PAR AMOUNT: The face amount or value of a bond. [Referenced page: 19, 351
<br />PASS -THOUGH SECURITY: A pool of fixed income securities backed by a package of assets (i.e.
<br />mortgages) where the holder receives the principal and interest payments. [Referenced pages: 331
<br />PORTFOLIO: Collection of securities held by an investor. [Referenced pages: 1, 2, 3, 4, 5, 6, 7, 9, 10, 11,
<br />12, 13, 14, 15, 16, 17, 18, 19, 20, 25, 31, 35]
<br />PRINCIPAL: The face value or par value of an investment. [Referenced pages: 3, 4, 9, 13, 14, 21, 291
<br />PRUDENT INVESTOR STANDARD: A standard defined under State Government Code Section 53600.3
<br />that states when investing, reinvesting, purchasing, acquiring, exchanging selling, or managing public funds,
<br />a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing,
<br />including, but not limited to, the general economic conditions and the anticipated needs of the City, that a
<br />prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds
<br />of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the local
<br />agency. [Referenced page: 2, 9, 11]
<br />RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market
<br />price. This may be the amortized yield to maturity on a bond the current income return. [Referenced pages:
<br />4, 13, 19]
<br />REPURCHASE AGREEMENT (RP or REPO): A holder of securities sells these securities to an investor
<br />with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends
<br />the "seller" money for the period of the agreement, and the terms of the agreement are structured to
<br />compensate him for this. (E.g. - A contract in which the seller of securities, such as Treasury Bills, agrees to
<br />buy them back at a specified time and price; also called buyback.) See also Master Repurchase
<br />Agreement. [Referenced pages: 10, 16, 17, 29, 30, 31, 321
<br />REVERSE REPURCHASE AGREEMENT (REVERSE RP or REPO): A reverse -repurchase agreement
<br />(reverse repo) involves an investor borrowing cash from a financial institution in exchange for securities.
<br />The investor agrees to repurchase the securities at a specified date for the same cash value plus an agreed
<br />upon interest rate. Although the transaction is similar to a repo, the purpose of entering into a reverse repo
<br />is quite different. While a repo is a straightforward investment of public funds, the reverse repo is a
<br />borrowing. [Referenced pages: 14, 29, 30, 31, 32]
<br />SAFEKEEPING AND CUSTODY: In a third -party safekeeping agreement, the local government agency
<br />arranges for a firm other than the party that sold the investment to provide for the transfer and safekeeping
<br />of the securities. Financial firms should not serve as both government broker-dealer and custodian.
<br />Safekeeping represents a financial institution's obligation to act on behalf of the owner under the owner's
<br />control. Custody is a more clearly defined control position by the agent responding to the owner's
<br />requirements. Custody normally does not take place in the governmental entities depository bank.
<br />Investments should be settled in a delivery -versus -payment (DVP) basis. In this procedure, the buyer's
<br />payment for securities is due at the time of delivery. Security delivery and payment occur simultaneously.
<br />This practice ensures that no funds are at risk in an investment transaction as funds are not released until
<br />securities are delivered, ensuring the governmental entity has either money or securities at all times during
<br />the transaction. [Referenced page: 16]
<br />City of Santa - AnnualJuly 1, 2018 -
<br />Statement of Investment Policy 5gr)G5 June 30, 2019
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