PUBLIC FUNDS
Primary Goal of Managing Public Funds
What is: Safety, Liquidity and Yield
This strategy involves spreading investments across different asset classes to reduce risk
What is diversification?
These annual number of hours of investment training hours are required by PFIA
What is 4? 8 hours every 2 years.
Section 2256.008, (2) (a-1)
This type of investment pool allows local governments to collectively invest funds in a diversified portfolio, offering higher yields than traditional bank accounts while maintaining liquidity and safety
What is a local government investment pool? LGIP? or investment pool?
This animal, known for its long, curved horns, is the official large mammal of Texas
What is the Texas Longhorn?
This game show host would've accepted Bevo too!
The best practices recommended by GFOA for the number of security bids received relative to treasury securities.
GFOA recommends that government entities obtain at least 3 competitive bids when seeking treasury services. This allows for entities to assess multiple options and select the best value for public funds.
A normal yield curve is sloped
What is up or upward?
Per PFIA, investment reports must be submitted no less than...
What is no less than Quarterly?
Sec. 2256.023. Internal Management Reports. (a) Not less than quarterly, the investment officer shall prepare and submit to the governing body of the entity a written report of investment transactions for all funds covered by this chapter for the preceding reporting period.
A U.S. Treasury Note pays interest
What is semi-annual? The interest is paid to the holder of the note every six months until maturity, at which point the face value of the note is repaid.
In 1839, this Texas city became the first capital of the Republic of Texas after its independence from Mexico
What is Houston?
This term refers to the separation of funds and assets held for different public purposes
What is: Fund accounting.
Fund accounting is a system used by governments and non-profit organizations to track and manage financial resources allocated for specific purposes. Each "fund" represents a self-balancing set of accounts for a particular activity, project, or objective.
When interest rates are falling, the yield on investment pools will generally ________ the yield on short-term securities.
What is "higher" than..
Investment pools and money market funds tend to lag behind interest rate cuts.
Maximum stated maturity for commercial paper, per PFIA
What is 365 days?
Sec. 2256.013. AUTHORIZED INVESTMENTS: COMMERCIAL PAPER. Commercial paper is an authorized investment under this subchapter if the commercial paper:
(1) has a stated maturity of 365 days or fewer from the date of its issuance
If interest rates go down, the market value of a U.S. Treasury Note will
What is go up or increase?
Inverse relationship. The fixed coupon payments of the security become more attractive relative to newly issued securities that offer lower yields, leading to an increase in demand and, consequently, an increase in market value.
This body of water, located along the Texas coast, is the largest estuary in the United States and crucial for marine life
What is Galveston Bay?
This is the name of the annual audit report required by local governments
What is the Comprehensive Annual Financial Report (CAFR)? Or if you prefer the updated terminology, What is the Annual Comprehensive Financial Report (ACFR)?
Local governments use this strategy to minimize the impact of interest rate changes by staggering bond maturities across different periods.
What is a laddered bond strategy or laddered strategy?
Short laddering - When rates go up
Long laddering - When rates are going down or being cut.
This foreign country bonds are allowable in Section 2256.009 of the PFIA
What is Israel?
2256.009 - (6) bonds issued, assumed, or guaranteed by the State of Israel;
This type of security is subject to payment of the principal amount prior to the stated maturity date is a
What is a callable security?
Callable securities generally offer higher yields to compensate investors for the added risk that the bond might be called away before they receive all of the expected interest payments.
This Texas city is known as the 'Cowboy Capital of the World' due to its historical connection to the cowboy culture and its role in rodeo competitions
What is Bandera TX?
This act or board requires regular financial disclosures and audits of public fund managers
What is: The Government Accounting Standards Board (GASB) requirements.
This strategy seeks to reduce risk by diversifying investments across different asset classes, such as bonds, equities, and alternative investments, to achieve a balanced risk-return profile
What is an asset allocation strategy?
Analyze the yield curve and choose investments that benefit in the varied sections of the yield curve. Adjust as needed.
This type of fund aims to preserve the principal value of its investments, maintaining a constant net asset value of $1 per share
What is a money market fund?
LGIPs are not required to maintain a constant $1 NAV. The section references pool funds that maintain a $1 NAV, but does not require. Variable funds and constant.
This short-term, unsecured debt instrument is typically issued by corporations with high credit ratings, and is often used by local governments as a cash management tool for temporary funding needs
What is commercial paper?"
Sec. 2256.013. AUTHORIZED INVESTMENTS: COMMERCIAL PAPER. (1) has a stated maturity of 365 days or fewer from the date of its issuance; and (2) is rated not less than A-1 or P-1 or an equivalent rating by at least:
Commercial paper is a popular investment for governments and corporations due to its short maturity and relatively low risk, as it’s issued by financially stable entities.
This Texas-born inventor is credited with creating the modern automatic oil well drilling rig in the early 20th century, revolutionizing the oil industry.
Who is George H. Bush?