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City of Orono, Minnesota <br />Notes to the Financial Statements <br />December 31, 2023 <br />Note 3: Detailed Notes on All Funds (Continued) <br />investment balances were as follows: <br />(1) Ratings are provided by where applicable to indicate associated credit risk. <br />(2) Interest rate risk in disclosed using the segmented time distribution method. <br />N/A Indicates not applicable or available. <br />The investments of the City are subject to the following risks: <br />Interest Rate Risk -Interest Rate Risk is the risk that changes in interest rates will adversely affect the fair value of <br />an investment. duration of <br />investments to a maturity of eight years, and twenty percent (20 percent) of the portfolio to a specific maturity. <br />The City was not exposed to interest rate risks due to the fact that their investments are not exposed to highly <br />sensitive changes in interest rates. <br />Credit Risk - Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its <br />obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated <br />page 56 <br />of the notes to the financial statements. In accordance with its investment policy, the City will minimize credit risk <br />by limiting investments to the safest types of securities, pre-qualifying the financial institutions, broker/dealers, <br />intermediaries, and advisers with which the City will do business, and diversifying the investment portfolio so that <br />the impact of potential losses from any one type of security or from any one individual issuer will be minimized. <br />Reverse repurchase agreements <br />Mortgage-backed securities, as defined in Minnesota Statute § 118A.04, Subd. 6 <br />Future contracts <br />Options <br />Guaranteed investment contracts <br />62 <br />Interest rate risk in disclosed using the segmented time distribution method.Interest rate risk in disclosed using the segmented time distribution method. <br />Indicates not applicable or available.Indicates not applicable or available. <br />The investments of the City are The investments of the City are subject to the following risks:subject to the following risks: <br />Interest Rate RiskInterest Rate Risk --Interest Rate RiskInterest Rate Risk isis the risk that changes in interest rates will adversely affect ththe risk that changes in interest rates will adversely affect the fair value of <br />an investment. an investment. duration of duration of <br />investments to a maturity of eight years, and twenty percent (20 percent) of the portfolio to a specific maturity.investments to a maturity of eight years, and twenty percent (20 percent) of the portfolio to a specific maturity. <br />The City was not exposed to interest rate risks due to the fact that their investments are not exposed to highly The City was not exposed to interest rate risks due to the fact that their investments are not exposed to highly <br />97