Sarasota County Investment Policy 2018

Sarasota County Investment Policy 23 82. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. 83. MONEY MARKET MUTUAL FUND: Mutual funds that invest solely in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, repos and federal funds). 84. MORTGAGE BACKED SECURITY (MBS): A debt instrument with a pool of real estate loans as the underlying collateral. The mortgage payments of the individual real estate assets are used to pay interest and principal on the bonds. 85. MUNICIPAL BOND: A debt security issued by a state, municipality or county to finance its capital expenditures, including the construction of highways, bridges or schools. 86. MUTUAL FUND: An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by Securities and Exchange Commission (SEC) disclosure guidelines. 87. NATIONALY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO): A credit rating agency (CRA) that issues credit ratings that the U.S. Securities and Exchange Commission (SEC) permits other financial firms to use for certain regulatory purposes. Examples of a CRA include: Moody’s, S&P and Fitch, among others. 88. NOMINAL YIELD: The stated rate of interest that a bond pays its current owner, based on par value of the security. It is also known as the “coupon”, “coupon rate”, or “interest rate”. 89. OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See “Asked” and “Bid”. 90. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve’s most important and most flexible monetary policy tool. 91. PAR: Face value or principal value of a bond, typically $1,000 per bond. 92. PASSIVE IVESTMENT STRATEGY: Passive investment management is an investment strategy in which securities are bought with the intention of holding them to maturity or investing in benchmark products designed to yield a market rate of return. 93. PORTFOLIO: Collection of securities held by an investor. 94. POSITIVE YIELD CURVE: A chart formation that illustrates short-term securities having lower yields than long-term securities. 95. PREMIUM: The amount by which the price paid for a security exceeds the security's par value. 96. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York