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Chapter: 1600 Assets Program: MSSI, SFP 32

1640.0569 Alaskan Native Stock (MSSI, SFP) Federal law excludes certain shares of stock held by natives of Alaska in a regional or village corporation from counting as assets for a period of 20 years from the date they are purchased. 1640.0570 Mutual Fund Shares (MSSI, SFP) A mutual fund is a company that buys and sells securities and other property as its primary business. Mutual fund shares are generally liquid assets.

The value of mutual funds is determined in the same way as stock values are determined. 1640.0571 Bonds (MSSI, SFP) When an individual requests that a bond be sold, about seven to ten days are usually required for the individual to receive the proceeds. Therefore, bonds are generally included as assets.

A bond is a written obligation to pay a sum of money at a future specified date. It is a negotiable instrument and is transferable.

Municipal bonds are issued by a state or local government. Corporate bonds are issued by corporations. Government bonds are issued by an agency of the federal government and, except for U.S. Savings Bonds, are transferable.

A bond must be held until the specified date of maturity before it can be redeemed for its face value. The current cash value of a bond before maturity is determined by the market for it.

If there is a great demand for a bond, its market value may be more than the face value; or if there is little demand, the bond's current market value may be substantially less than the face value. The current price of a bond can generally be determined as it would be for a stock. 1640.0572 Savings Bonds (MSSI, SFP) U.S. Savings Bonds are an obligation of the federal government, but unlike other government bonds, they are not transferable; that is, they can only be sold back to the government.

U.S. Savings Bonds are usually registered in the name of the owner(s) shown on the front of the bond and may be redeemed by the owner by completing a form on the back of the bond. If ownership of a bond is shared, each person’s share is equal. All owners must agree to liquidate the bond.

Several series of U.S. Savings Bonds (for example, Series EE, HH, E, I, J, and H) can normally be quickly converted into cash at local banks. These bonds are defined as liquid assets and are counted as resources. Do not use the table sometimes provided on the back of the bond to determine its value. The tables often do not reflect changes in interest rates. A bank must be contacted to determine the current value. The face value of Series H bonds does not change. No further verification of value is necessary for that series; however, interest is paid rather than accrued on these bonds.

Some bonds must be held for a specific period of time from the date of issue before they can be converted to cash. Examples of bonds with retention periods are indicated below:

1. Series EE and I bonds issued prior to February 1, 2003 can be converted to cash at any time after six months from the issue date. 2. Series EE and I bonds issued on or after February 1, 2003 can be converted to cash at any time after twelve months from the issue date. 3. Series HH bonds can be converted to cash at any time after six months from the issue date.