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5.1 <br /> <br />5.2 <br /> <br />5.2.1 <br /> <br />(Draft January 2002) Key Financial Strategies <br /> For Elk River <br /> <br /> · High risk mortgage-backed securities are as follows: (1) interest- <br /> only or principal-only mortgage-backed securities; or, (2) any <br /> mortgage derivative security that: (a) has an expected average life <br /> greater than ten years; (b) has an expected average hfe that: (i) will <br /> extend by more than four years as the result of an immediate and <br /> sustained paralld shift in the yield curve of plus 300 basis points; or <br /> (ii) will shorten by more than six years as the result of an immediate <br /> and sustained paralld shift in the yield curve of minus 300 basis <br /> points; or (c) will have an estimated change in price of more than 17 <br /> percent as the result of an immediate and sustained paralld shift in <br /> the yidd curve of plus or minus 300 basis points. <br />· Minnesota Joint Powers Investment Trust: Agreements or Contracts <br /> for shares of a Minnesota joint powers investment trust whose <br /> investments are restricted to securities authorized for investment by <br /> the government entity and shares of an investment company <br /> registered under the Federal Investment Company Act of 1940, <br /> whose shares are registered under the Federal Securities Act of 1933, <br /> as long as the investment company's fund receives the highest credit <br /> rating and is rated in one of the two highest risk rating categories by <br /> at least one nationally recognized statistical rating organization and <br /> is invested in financial instruments with a final maturity of no longer <br /> than 13 months. <br />· State and Local Securities: State and local government obhgations as <br /> follows: (1) any security which is a general obhgation of any state or <br /> local government with taxing powers which is rated "A~ or better by <br /> a national bond rating service; (2) any security which is a revenue <br /> obhgation of any state or local government with taxing powers <br /> which is rated "AA' or better by a national bond rating service; and, <br /> (3) a general obhgation of the Minnesota Housing Finance Agency <br /> which is a moral obhgation of the State of Minnesota and is rated <br /> "A' or better by a national bond rating service. <br />· Commercial paper issued by United States corporations or their <br /> Canadian subsidiaries that are rated in the highest quahty category <br /> by at least two nationally recognized rating agencies. <br />· Time deposits that are fully insured by the Federal Deposit <br /> Insurance Corporation. <br />· Bankers acceptances of United States banks. <br /> <br />The following procedures are to be followed for all normal purchasing <br />whether or not competitive bids are necessary. <br /> <br />Purchasing <br /> <br />Purchase orders are not needed for items costing less than $750. <br />Department head authorization is required prior to making the <br />purchase. Each department head is responsible for implementing <br />purchasing procedures for the department for purchases of items costing <br />less than $750 to ensure that employees do not make purchases in excess <br />of the budgeted amount. <br /> <br />Purchase orders shall be issued for all purchase of $750 or more with the <br />exception of: (1) consulting services, (2) contractual agreements, (3) <br /> <br />Page <br /> 16 <br /> <br /> <br />