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S.B. - Page 44 of 59 REDWOOD CITY GLOSSARY For the Quarter Ended December 31, 2019 Appendix • ACCRUED INTEREST: Interest that is due on a bond or other fixed income security since the last interest payment was made. • AGENCIES: Federal agency securities and/or Government-sponsored enterprises. • AMORTIZED COST: The original cost of the principal of the security is adjusted for the amount of the periodic reduction of any discount or premium from the purchase date until the date of the report. Discount or premium with respect to short-term securities (those with less than one year to maturity at time of issuance) is amortized on a straight line basis. Such discount or premium with respect to longer-term securities is amortized using the constant yield basis. • BANKERS' ACCEPTANCE: A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill as well as the insurer. • COMMERCIAL PAPER: An unsecured obligation issued by a corporation or bank to finance its short-term credit needs, such as accounts receivable and inventory. • CONTRIBUTION TO DURATION: Represents each sector or maturity range's relative contribution to the overall duration of the portfolio measured as a percentage weighting. Since duration is a key measure of interest rate sensitivity, the contribution to duration measures the relative amount or contribution of that sector or maturity range to the total rate sensitivity of the portfolio. • DURATION TO WORST: A measure of the sensitivity of a security's price to a change in interest rates, stated in years, computed from cash flows to the maturity date or to the put date, whichever results in the highest yield to the investor. • EFFECTIVE DURATION: A measure of the sensitivity of a security's price to a change in interest rates, stated in years. • EFFECTIVE YIELD: The total yield an investor receives in relation to the nominal yield or coupon of a bond. Effective yield takes into account the power of compounding on investment returns, while nominal yield does not. • FDIC: Federal Deposit Insurance Corporation. A federal agency that insures bank deposits to a specified amount. • INTEREST RATE: Interest per year divided by principal amount and expressed as a percentage. • MARKET VALUE: The value that would be received or paid for an investment in an orderly transaction between market participants at the measurement date. • MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. • NEGOTIABLE CERTIFICATES OF DEPOSIT: A CD with a very large denomination, usually $1 million or more, that can be traded in secondary markets. • PAR VALUE: The nominal dollar face amount of a security. PFM Asset Management LLC 0