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CITY OF REDWOOD CITY <br />INVESTMENT POLICY <br /> draft update: 8/28/17 18 <br />the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the <br />yield curve. <br />TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the <br />national debt. Most bills are issued to mature in three months, six months, or one year. <br />TREASURY BONDS: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of <br />the U.S. Government and having initial maturities of more than 10 years. <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 <br />as 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 <br />owed to a firm, including margin loans and commitments to purchase securities, one reason new <br />public issues are spread among members of underwriting syndicates. Liquid capital includes cash and <br />assets easily converted into cash. <br />YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME <br />YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) <br />NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus <br />any 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.B. - Page 44