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CITY OF GEM LAKE, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br /> <br /> <br /> <br />(23) <br /> <br />NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) <br />B. Investments (Continued) <br /> <br />Interest Rate Risk <br />Interest rate risk is the risk that changes in interest rates will adversely affect the fair <br />value of an investment. Generally, the longer the maturity of an investment, the greater <br />the sensitivity of its fair value to changes in market interest rates. The City’s investment <br />policy doesn’t specifically address interest rate risk. Information about the sensitivty of <br />the fair values of the City’s investments to market interest rate risk fluctuations is <br />provided by the following table that shows the distribution of the City’s investments by <br />maturity: <br /> <br />12 Months 13 to 24 25 to 60 More than <br />Type Total or Less Months Months 60 Months <br />Negotiable Certificates of Deposit $562,025 $421,012 $100,301 -$ $40,712 <br />Wells Fargo Prime Investment Fund 165,254 165,254 - - - <br />Total 727,279$ 586,266$ 100,301$ -$ 40,712$ <br />Credit Risk <br />Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation <br />to the holder of the investment. This is measured by the assignment of a rating by a <br />nationally recognized statistical rating organization. The City’s investment policy doesn’t <br />specifically address credit risk. The following chart summarizes year-end ratings for the <br />City’s investments as rated by Moody’s Investors Services: <br /> <br />Credit <br />Type Quality Rating Amount <br />Government Money Market Mutual Funds NR 165,254$ <br />Negotiable Certificates of Deposit: <br />Santander Bank CD NR 175,000 <br />GE Capital Bank CD NR 246,012 <br />Goldman Sachs Bank CD NR 141,013 <br />Total Negotiable Certificates of Deposits 562,025 <br />Total 727,279$ <br />NR = Not Rated