Investment

Investment terms

1. "Repos" (Repurchase Agreements) An agreement to purchase securities from an entity for a specified amount of cash and to resell the securities to the entity at an agreed upon price and…
2. Agency Securities Securities issued by U.S. government agencies, such as the Federal Home Loan Bank.
3. Asset Anything owned that has value; any interest in real property or personal property that can be used for payment of debts.
4. Asset Backed Securities Financial instruments collateralized by one or more types of assets including real property, mortgages, and receivables.
5. BA (Banker's Acceptance) A high-quality, short-term negotiable discount note, drawn on and accepted by banks that are obligated to pay the amount at maturity.
6. Banker’s Acceptance (BA) (BA) A high-quality, short-term negotiable discount note, drawn on and accepted by banks that are obligated to pay the amount at maturity.
7. Basis Point (bp) (bp) The smallest measure used in quoting yields or returns. One basis point is 0.01% of yield, 100 basis points equals 1%. A yield that changed from 8.
8. Benchmark A standard unit used as the basis of comparison; a universal unit that is identified with sufficient detail so that other similar classifications can be…
9. Book Value (BV) (BV) The value of individual assets, calculated as actual cost less allowance for any depreciation. Book value may be more or less than current market value.
10. bp (Basis Point) The smallest measure used in quoting yields or returns. One basis point is 0.01% of yield, 100 basis points equals 1%. A yield that changed from 8.
11. BV (Book Value) The value of individual assets, calculated as actual cost less allowance for any depreciation. Book value may be more or less than current market value.
12. Capital Gain Also known as capital appreciation, capital gain measures the increase in value of an asset over time.
13. Carrying Amount See book value definition.
14. CDs (Certificates of Deposit) A debt instrument issued by banks, usually paying interest, with maturities ranging from seven days to several years.
15. Certificates of Deposit (CD) (CD) A debt instrument issued by banks, usually paying interest, with maturities ranging from seven days to several years.
16. CMOs (Collateralized Mortgage Obligations) Mortgage-backed securities, segmented into tranches, so that investors can choose a tranche that fits their desired timing of payments.
17. Collateral Assets that are offered to secure a loan or other credit. For example, if you get a real estate mortgage, the bank's collateral is typically your house.
18. Collateralized Mortgage Obligation (CMO) (CMO) Mortgage-backed securities, segmented into tranches, so that investors can choose a tranche that fits their desired timing of payments.
19. Commercial Paper Short-term, unsecured, discounted notes issued by institutional borrowers and sold to investors for short term cash investment needs.
20. Corporate Bond A debt obligation issued by a corporation.
21. Coupon A certificate that accompanies a bond that indicates the amount of interest it pays and the date it is due.
22. Diversification The investment in a number of different securities. To reduce the risk of loss inherent in investing.
23. Endowment Funds Those funds that have been given to the State of Arizona and held in perpetual trust, the investment of which is made on behalf of designated…
24. Federal Funds Rate The interest rate charged by banks with excess reserves at a Federal Reserve district bank to banks needing oversight loans to meet reserve requirements.
25. Federal Reserve Board The governing body of the Federal Reserve System (12 regional federal banks monitoring the commercial and savings banks in their regions).
26. Fixed Income Security A security such as a bond that pays a specified cash flow over a specific period of time.
27. Index Statistical measure of the state of the stock market or economy based on the performance of stocks or other components.
28. Investment Income The equity dividends, bond interest, and/or cash interest paid on an investment.
29. Liability A legally enforceable financial obligation caused by negligence.
30. Liquidity The ability of the market for a security to absorb a reasonable amount of buying or selling without major price changes.
31. Loss (Realized Gain) A gain (loss) that has occurred financially. The difference between the principal amount received and the cost basis after the sale of an asset.
32. Loss (Unrealized Gain) A profit (loss) that has not been realized through the sale of a security. The gain (loss) is realized when a security or futures contract is actually…
33. Market Value The price that the market - any market - sets at a particular time as the price at which an asset can be bought or sold.
34. Marking to Market Process of determining the value of an asset based upon the going market rate for like assets on any given day.
35. Maturity Date ​The date as of which the principal of and interest on a security become due and payable.
36. Modified Duration The weighted average time to receipt of all cashflows, including coupon payments, on a present value basis.
37. Money Market Fund An open-ended mutual fund that invests in short-term debts and monetary instruments such as Treasury bills and pays money market rates of interest.
38. Moody's Corporate Ratings Moody's ratings provide investors with a simple system of gradation by which the relative investment qualities of a bond may be noted.
39. Moody's Investors Service A financial services company that is one of the best known bond rating agencies in the country.
40. Moody's Short-term Debt Ratings Moody's short-term debt ratings are opinions of the ability of issuers to repay punctually senior debt obligations.
41. Mortgage-backed Security Ownership claim in a pool of mortgages or an obligation that is secured by such a pool.
42. Non-endowment Funds Composed of various trust monies invested on behalf of Arizona's state agencies, as well as local governments.
43. Operating Monies Those monies invested by the State Treasurer, the earnings of which are not statutorily returned to any specific fund, and therefore, accrue to the state…
44. Par Value The stated or face value of a stock or bond. It has little significance for common stocks, however, for bonds it specifies the payment amount at maturity.
45. Pooling Combining of assets of different entities, i.e., two or more counties, for efficient investment purposes while maintaining separate accounting trails.
46. Present value The current value of a future cash flow or series of cash flows discounted at an appropriate interest rate or rates.
47. Present value (PV) (PV) The current value of a future cash flow or series of cash flows discounted at an appropriate interest rate or rates.
48. Principal Face value of an obligation, such as a bond or a loan, that must be repaid at maturity.
49. Prudent Person Rule The standard adopted by some states to guide those fiduciaries with responsibility for investing money of others.
50. Realized Gain (Loss) A gain (loss) that has occurred financially. The difference between the principal amount received and the cost basis after the sale of an asset.
51. Repurchase Agreements (“Repos”) An agreement to purchase securities from an entity for a specified amount of cash and to resell the securities to the entity at an agreed upon price and…
52. Reverse Repurchase Agreement A customer sells a group of securities to a broker-dealer under the provision that the customer will buy them back by a predetermined date for a specific…
53. S&P (Standard and Poor's) A financial services company which is one of the best known bond rating agencies in the country.
54. Salomon Brothers Broad Investment-Grade (BIG) Bond Index (BIG) The BIG Index is a market-capitalization weighted index which includes fixed-rate Treasury, government sponsored, corporate (Baa3/BBB- or better), and…
55. Securities Lending A carefully collateralized process of loaning portfolio positions to custodians, dealers, and short sellers who must make physical delivery of positions.
56. Standard and Poor’s (S&P) (S&P) A financial services company which is one of the best known bond rating agencies in the country.
57. T-Bill (Treasury Bill) Short-term, highly liquid government securities issued at a discount from the face value and returning the face amount at maturity.
58. Treasury Bill (T-Bill) (T-Bill) Short-term, highly liquid government securities issued at a discount from the face value and returning the face amount at maturity.
59. Treasury Bond or Note Debt obligations of the Federal government that make semiannual coupon payments and are sold at or near par value in denominations of $1,000 or more.
60. Tri-Party Repo In a tri-party repo, an independent institution enters into a tripartite agreement with the two counterparties to the transaction.
61. Tripartite Relating to or executed by three parties: a tripartite agreement.
62. Trust A fiduciary relationship in which a person, called a trustee, holds title to property for the benefit of another person, called a beneficiary.
63. Unrealized Gain (Loss) A profit (loss) that has not been realized through the sale of a security. The gain (loss) is realized when a security or futures contract is actually…
64. Yield Yield is most commonly associated with a money market fund's return. "Current Yield" is based on daily return, "Effective Yield" on the annual compounded…
65. Yield Curve A graph showing the term structure of interest rates by plotting the yields of all bonds of the same quality with maturities ranging from the shortest to…
66. Yield to Maturity A measure of the average rate of return that will be earned on a bond if held to maturity.