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San Leandro Investment Policy Statement Page 11 of 13 <br />Appendix B <br />Glossary of Technical Terms <br />Banker's Acceptance (BA) — A draft or bill of exchange accepted by a bank or trust <br />company. The accepting institution guarantees payment of the bill. <br />Broker — A broker, as opposed to a dealer, brings buyers and sellers together in <br />exchange for an agreed upon commission or fee. A broker is not a principal party to the <br />transaction. <br />Certificate of Deposit (CD) — A time deposit with a specific maturity date and specific <br />interest rate as evidenced by a certificate. <br />Collateral — Securities pledged by a bank or other financial institution to secure <br />repurchase agreements, certificates of deposit and deposits of public monies. <br />Commercial Paper — Negotiable short -term promissory notes issued by larger, well - <br />known corporations. <br />Dealer — A dealer, as opposed to a broker, acts as a principal in all transactions, buying <br />and selling for its account. <br />Delivery Versus Payment — a method of purchasing securities where the security is <br />delivered to the safekeeping party in exchange for cash payment. <br />Federal Deposit Insurance Corporation (FDIC) — A federal agency that insures bank <br />deposits — currently up to $100,000 per deposit. <br />Federal Farm Credit Bank (FFCB) — A federal government sponsored bank that <br />provides loans and letters of credit that support United States agriculture. <br />Federal Home Loan Banks (FHLB) — Federal government sponsored wholesale banks <br />that lend funds and provide banking services to member commercial banks, thrift <br />institutions, credit unions and insurance companies. <br />Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac ") — A federal <br />corporation that provides low cost residential mortgage funds to qualified borrowers. <br />Federal National Mortgage Association (FNMA or "Fannie Mae ") — A federal <br />corporation working under the auspices of the U.S. Department of Housing and Urban <br />Development (HUD). FNMA is the largest single provider of residential mortgage funds <br />in the United States. <br />Liquidity — A measure of how easily an asset can be converted to cash with minimal <br />loss of value. Securities issued by the U.S government and its agencies are highly <br />liquid because they have established and active markets. <br />