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ATTACHMENT 2 <br />19 <br />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 />Page 52 of 248