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CITY OF REDWOOD CITY <br />INVESTMENT POLICY <br /> Last update: 6/22/2016 16 <br />TREASURY NOTES: Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations <br />of the U.S. Government and having initial maturities from two to 10 years. <br />UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as <br />well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid <br />capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed <br />to a firm, including margin loans and commitments to purchase securities, one reason new public issues <br />are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily <br />converted into cash. <br />YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD <br />is obtained by dividing the current dollar income by the current market price for the security. (b) NET <br />YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any <br />discount from par in purchase price, with the adjustment spread over the period from the date of <br />purchase to the date of maturity of the bond. <br /> <br /> <br />6.1.I. - Page 29