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REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous <br /> agreement to sell the securities back at a higher price. From the seller's point of <br /> view, the same transaction is a reverse repurchase agreement. <br /> SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the <br /> customer's name. <br /> STRUCTURED NOTE. A complex, fixed income instrument, which pays interest, based on a <br /> formula tied to other interest rates, commodities or indices. Examples include <br /> inverse floating rate notes which have coupons that increase when other interest <br /> rates are falling, and which fall when other interest rates are rising, and "dual index <br /> floaters," which pay interest based on the relationship between two other interest <br /> rates - for example, the yield on the ten-year Treasury note minus the Secured <br /> Overnight Financing Rate (SOFR). Issuers of such notes lock in a reduced cost of <br /> borrowing by purchasing interest rate swap agreements. <br /> SUPRANATIONAL. A Supranational is a multi-national organization whereby member states <br /> transcend national boundaries or interests to share in the decision making to <br /> promote economic development in the member countries. <br /> TOTAL RATE OF RETURN.A measure of a portfolio's performance over time. It is the internal <br /> rate of return, which equates the beginning value of the portfolio with the ending <br /> value; it includes interest earnings, realized and unrealized gains, and losses in <br /> the portfolio. <br /> U.S. TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the <br /> full faith and credit of the United States. Treasuries are considered to have no <br /> credit risk and are the benchmark for interest rates on all other securities in the US <br /> and overseas. The Treasury issues both discounted securities and fixed coupon <br /> notes and bonds. <br /> TREASURY BILLS. All securities issued with initial maturities of one year or less are issued <br /> as discounted instruments and are called Treasury bills. The Treasury currently <br /> issues three- and six-month T-bills at regular weekly auctions. It also issues "cash <br /> management" bills as needed to smooth out cash flows. <br /> TREASURY NOTES. All securities issued with initial maturities of two to ten years are called <br /> Treasury notes and pay interest semi-annually. <br /> TREASURY BONDS. All securities issued with initial maturities greater than ten years are <br /> called Treasury bonds. Like Treasury notes, they pay interest semi-annually. <br /> VOLATILITY. The rate at which security prices change with changes in general economic <br /> conditions or the general level of interest rates. <br /> YIELD TO MATURITY. The annualized internal rate of return on an investment which equates <br /> the expected cash flows from the investment to its cost. <br /> 19 <br />