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FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association <br /> was established to provide credit and liquidity in the housing market. FNMA. also <br /> known as "FannieMae," issues discount notes, bonds and mortgage pass - <br /> through securities. <br /> Apportionment Rate. The apportionment rate is calculated by the State Controller on <br /> a quarterly basis. Each rate is based on the average of rates earned by the State on <br /> surplus money for the applicable quarter. (1) <br /> Asked. The price at which a seller offers to sell a security. <br /> Average book yield. Combination of all holdings yield. <br /> Average life. In mortgage - related investments, including CMOs, the average time to <br /> expected receipt of principal payments, weighted by the amount of principal expected. <br /> Average Maturity (years). Number of days to maturity for each investment divided by <br /> 365 days. <br /> Average yield to maturity at market. Today's average yield. <br /> Benchmark. A comparison security or portfolio. A performance benchmark is a partial <br /> market index, which reflects the mix of securities allowed under a specific investment <br /> policy. <br /> Broker. A broker brings buyers and sellers together for a transaction for which the <br /> broker receives a commission. A broker does not sell securities from his own position. <br /> Commercial paper. The short-term unsecured debt of corporations. <br /> Diversification. Dividing investment funds among a variety of investments to avoid <br /> excessive exposure to any one source of risk. <br /> Duration. The weighted average time to maturity of a bond where the weights are the <br /> present values of the future cash flows. Duration measures the price sensitivity of a <br /> bond to changes in interest rates. (See modified duration). <br /> Federal funds rate. The rate of interest charged by banks for short-term loans to other <br /> banks. The Federal Reserve Bank through open- market operations establishes it. <br /> LAIF. Local Agency Investment Fund is a voluntary program created by statute in 1977 <br /> as an investment alternative for California's local governments and special districts. <br /> Leverage. Borrowing funds in order to invest in securities that have the potential to pay <br /> earnings at a rate higher than the cost of borrowing. <br />