securities Flashcards
UBPR pg 6
Securites Breakdown
UBPR pg 10
Composition of securities portfolio
Investment-quality security w/ temporary impairment
Pass
Investment-quality security w/ OTTI
Classify Loss
Sub-investment grade security w/OTTI
Classify fair value substandard and impairment Loss
Sub-investment grade security w/temporary impairment
Classify amortized cost substandard
Type I Securities - no limitation
U.S. gov’t, general obligations of a state/political subdivision, municipal bond activities by well capitalized banks, obligations backed by the full faith and credit of US Gov’t, and FHLB, Fannie Mae, FHLMC debt
Type II Securities - 10% of capital and surplus
state obligations for housing, university, or dormitory purposes; obligations of international development banks; debt of Tennessee Valley Authority; debt of U.S. Postal Service
Type III Securities - 10% of capital and surplus
municipal revenue bonds; corporate bonds
Type IV Securities - 25% of capital and surplus (for mtg related security, no limitation)
investment-grade small business related securities; residential or commercial mortgageÐrelated securities rated AA or Aa or higher;
Type V Securities - 25% of capital and surplus
investment-grade and marketable asset-backed securities; investment grade residential and commercial mortgageÐrelated securities rated below AA or Aa,
These investments are short-term, highly liquid, and high-quality?
Money market investments
Which type of muni security relies on the taxing powers of the issuing government unit as a source of repayment?
General obligation
Trust Preferred Securities can expose investors to interest rate risk becauseÉ.
they have extended maturities
Effective Interest Method
Preferred method for amortizing premiums or accreting discounts. Process that systematically writes off a bond premium or discount by taking into acct the time value of money and results in an equal rate of amort/accretion for each period.
