26BUDGET(FULL-LINKED) - Flipbook - Page 276
MONEY MARKET FUND: A type of mutual fund that invests in short-term, high-quality debt securities
such as Treasury bills, certificates of deposit, and commercial paper. These funds aim to maintain a stable
net asset value (typically $1.00 per share) and provide liquidity and safety, making them a common option
for short-term cash management.
PORTFOLIO: Collection of securities held by an investor.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market
price. This may be the amortized yield to maturity.
REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an
investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect
lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to
compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is
said to be doing RP, it is lending money that is, increasing bank reserves.
SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all
types and descriptions are held in the bank’s vaults for protection.
SPECULATION: Assumption of risk in anticipation of gain but recognizing a higher than average
possibility of loss.
TREASURY BONDS: Long-term coupon-bearing U. S. Treasury securities issued as direct obligations of
the U. S. Government and having initial maturities of more than ten years.
TREASURY NOTES: Medium-term coupon-bearing U. S. Treasury securities issued as direct obligations
of the U. S. Government and having initial maturities from two to ten years.
YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME
YIELD is obtained by dividing the current dollar income by the current market price for the security. (b)
NET YIELD or
YIELD TO MATURITY: Current income yield minus any premium above par or plus any discount from
par in purchase price, with the adjustment spread over the period from the date of purchase to the date of
maturity of the bond.
INVPOL25
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