Sarasota County Investment Policy 2018

Sarasota County Investment Policy 16 IV. GLOSSARY OF TERMS 1. ACCRUED INTEREST: The accumulated interest due on a bond from the last interest payment made by the issuer. 2. ACTIVE INVESTMENT STRATEGY: An investment strategy involving ongoing buying and selling actions by the investor. Active investors purchase investments and continuously monitor their activity in order to take advantage of advantageous conditions. 3. AMORTIZATION: The systematic reduction of the amount owed on a debt issue through periodic payments of principal. 4. ASKED: The price at which securities are offered for sale. 5. ASSET-BACKED SECURITY (ABS): A financial security backed by a loan, lease or receivables against assets other than real estate and mortgage-backed securities. 6. BANKERS’ ACCEPTANCE (BA): A short-term debt instrument issued by a company that is guaranteed by a commercial bank. Banker’s acceptances are issued as part of a commercial transaction. These instruments are similar to T-Bills, are frequently used in money market funds and are traded at a discount from face value on the secondary market, which can be an advantage because the banker’s acceptance does not need to be held until it matures. 7. BASIS POINT: A unit of measurement used in the valuation of fixed-income securities equal to 1/100 of 1 percent of yield, e.g., "1/4" of 1 percent is equal to 25 basis points. 8. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the weighted average duration of the portfolio’s investments. 9. BID: The indicated price at which a buyer is willing to purchase a security or commodity. 10. BOOK VALUE: The value at which a security is carried on the inventory lists or other financial records of an investor. The book value may differ significantly from the security's current value in the market. 11. BROKER: A broker brings buyers and sellers together for a commission. 12. CALL PRICE: The price at which an issuer may redeem a bond prior to maturity. 13. CALL RISK: The risk to a bondholder that a bond may be redeemed prior to maturity. 14. CALLABLE BOND: A bond issue in which all or part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions. 15. CASH SALE/PURCHASE: A transaction, which calls for delivery and payment of securities on the same day that the transaction is initiated. 16. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a Certificate.