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Liquidity: The speed and ease with which an asset can be converted to cash. <br /> Market risk. The risk that the value of securities will fluctuate with changes in overall <br /> market conditions or interest rates. <br /> Market value. The price at which a security can be traded. <br /> Marking to market. The process of posting current market values for securities in a <br /> portfolio. <br /> Maturity. The final date upon which the principal of a security becomes due and <br /> payable. <br /> Modified duration. The percent change in price for a 100 basis point change in yields. <br /> Modified duration is the best single measure of a portfolio's or security's exposure to <br /> market risk. <br /> Money market. The market in which short term debt instruments (Tbills, discount <br /> notes, commercial paper and banker's acceptances) are issued and traded. <br /> Mortgage pass- through securities. A securitized participation in the interest and <br /> principal cashflows from a specified pool of mortgages. Principal and interest payments <br /> made on the mortgages are passed through to the holder of the security. <br /> Premium. The difference between the par value of a bond and the cost of the bond, <br /> when the cost is above par. <br /> Prudent person (Prudent investor) rule. A standard of responsibility which applies to <br /> fiduciaries. In California, the rule is stated as "Investments shall be managed with the <br /> care, skill, prudence and diligence, under the circumstances then prevailing, that a <br /> prudent person, acting in a like capacity and familiar with such matters, would use in the <br /> conduct of an enterprise of like character and with like aims to accomplish similar <br /> purposes." <br /> Realized yield. The change in value of the portfolio due to interest received and <br /> interest earned and realized gains and losses. It does not give effect to changes in <br /> market value on securities, which have not been sold from the portfolio. <br /> Safekeeping. A service to bank customers whereby securities are held by the bank in <br /> the customer's name. <br /> Total rate of return. A measure of a portfolio' performance over time. It is the internal <br /> rate of return, which equates the beginning value of the portfolio with the ending value; it <br /> includes interest earnings, realized and unrealized gains, and losses in the portfolio. <br />