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NOTE 2 <br />CITY OF GEM LAKE, MINNESOTA <br />NOTES: TO BASIC. FINANCIAL STATEMENTS <br />©ECEMBER 31, 2016 <br />DEPOSITS AND INVESTMENTS (CONTINUE©) <br />B. Investments (Continued) <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. Gen era IIy;.`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 />Maturity Duration to Years. <br />Investment Type <br />Total <br />Less Than 1 <br />1 t0.2 2 to 5 5 to:10 Rating <br />Negotiable Certificates of deposit <br />$ 354;000 <br />100,000 <br />$ 214,000 5 40,000 $ - Not Rated <br />Money Markets <br />3,087 <br />.3,087 <br />- _ - Aaa/AAA <br />$ 357,087 <br />$ 103,087 <br />$ 214,000 $ 40,600 $ <br />Credit Risk <br />Generally, credit risk is the risk that an issuer Of an investment will not ful€ill its obligation. <br />to the bolder 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 does. <br />not specifically address credit risk. <br />(23) <br />