Financial Glossary
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I
- A Nasdaq stock symbol specifying that it is the third preferred bond of the company.
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Icahn Lift
- The name given to the rise in stock price that occurs when Carl Icahn begins to purchase shares in a company. The Icahn lift occurs because of Mr. Icahn's reputation for creating value for the shareholders of the companies in which he takes an interest.
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Iceberg Order
- A large single order that has been divided into smaller lots, usually by the use of an automated program, for the purpose of hiding the actual order quantity.
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Ichimoku Kinko Hyo
- A technical indicator that is used to gauge momentum along with future areas of support and resistance. The Ichimoku indicator is comprised of five lines called the tenkan-sen, kijun-sen, senkou span A, senkou span B and chickou span. This indicator was developed so that a trader can gauge an asset's trend, momentum and support and resistance points without the need of any other technical indicator.
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Identifiable Asset
- An asset of an acquired company that can be assigned a fair value and can be reasonably expected to provide a benefit for the purchasing company in the future. Identifiable assets can be both tangible and intangible assets.
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Identity Theft
- The crime of obtaining the personal or financial information of another person for the sole purpose of assuming that person's name or identity in order to make transactions or purchases.
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Idiosyncratic Risk
- Risk that affects a very small number of assets, and can be almost eliminated with diversification. Similar to unsystematic risk.
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Idle Funds
- Money that is not invested and, therefore, earning no income. For example, funds in a checking account.
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Idle Time
- Unproductive time spent by employees due to factors beyond their control.
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IDR
- The currency abbreviation or the currency symbol for the Indonesian Rupiah (IDR). The Rupiah is made up of 100 sen, and is often presented with the symbol (Rp). The Rupiah derives its name from its sister currency the Indian Rupee. The Riau Islands and the Indonesian half of New Guinea both had their own versions of the Rupiah at one time, but both have been absorbed by the Indonesian currency.
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IDR (Indonesian Rupiah)
- The currency abbreviation or the currency symbol for the Indonesian rupiah (IDR). The rupiah is made up of 100 sen, and is often presented with the symbol Rp. The rupiah derives its name from its sister currency the Indian rupee. The Riau Islands and the Indonesian half of New Guinea both had their own versions of the rupiah at one time, but both have been absorbed by this Indonesian currency.
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Illiquid
- The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset. The lack of ready buyers also leads to larger discrepancies between the asking price (from the seller) and the bidding price (from a buyer) than would be found in an orderly market with daily trading activity.
- The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset. The lack of ready buyers also leads to larger discrepancies between the asking price (from the seller) and the bidding price (from a buyer) than would be found in an orderly market with daily trading activity.
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Illiquid Option
- An option contract that cannot be sold for cash quickly at the prevailing market price. Illiquid options have very low or no open interest.
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ILS
- The currency abbreviation or currency symbol for the Israeli New Sheqel (ILS), the currency for Israel. The New Sheqel is made up of 100 agorot, and is often presented with the symbol __. This symbol represents a combination of the first letters in Hebrew of the words "sheqel" and "hadash". The currency itself is actually produced by a South Korean company, as there is no mint in Israel.
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ILS (Israeli New Shequel)
- The currency abbreviation or currency symbol for the Israeli new sheqel (ILS), the currency for Israel. The new sheqel is made up of 100 agorot. This symbol represents a combination of the first letters in Hebrew for the words "sheqel" and "hadash". The currency itself is actually produced by a South Korean company, as there is no mint in Israel.
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Imbalance of Orders
- A situation when too many orders of a particular type - either buy, sell or limit - for listed securities and not enough of the other, matching orders are received by an exchange. Also referred to as "order imbalance".
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ImClone - IMCL
- A publicly-traded biotechnology company marketing products in the field of oncology. The company made international headlines in 2002 after ImClone's founder and CEO Sam Waksal was indicted for attempting an insider trade of the company's stock. Shortly after Waksal's indictment, "domestic diva" Martha Stewart was also indicted for insider trading of the same stock. Stewart received information from Waksal and her own broker that Waksal had been trying to dump $5 million worth of his shares in the company on insider information, and she sold her shares on the knowledge that Waksal had tried to sell his.
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Immediate Beneficiary
- A beneficiary designation most commonly used in charitable gift planning to describe which parties get an immediate benefit from a transaction. The most basic type of immediate beneficiary would be a charity that receives an outright gift from a donor. More generally, the term "immediate beneficiary" can also refer to any individual or organization that receives immediate benefits from a trust's assets.
- A beneficiary designation most commonly used in charitable gift planning to describe which parties get an immediate benefit from a transaction. The most basic type of immediate beneficiary would be a charity that receives an outright gift from a donor. More generally, the term "immediate beneficiary" can also refer to any individual or organization that receives immediate benefits from a trust's assets.
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Immediate Credit
- The Federal Reserve practice of "clearing" checks deposited by member banks on the same day they're deposited. This service is only available when the Federal Reserve has one of its branches in the same city as the bank wishing to process the check. Normally, checks are subject to "deferred availability" which means the amounts are made available within two days of deposit.
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Immediate Family
- A person's smallest family unit, consisting of the closest relatives, such as parents, siblings and children. Immediate family may contain both biological relatives and those related through marriage, such as a brother-in-law. Exact inclusions for the immediate family may differ depending on the defining party.
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Immediate Or Cancel Order - IOC
- An order requiring that all or part of the order be executed immediately after it has been brought to the market. Any portions not executed immediately are automatically cancelled.
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Immediate Payment Annuity
- An annuity contract that is purchased with one payment and has a specified payment plan which starts immediately.
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Immunization
- A strategy that matches the durations of assets and liabilities thereby minimizing the impact of interest rates on the net worth.
Also known as "multiperiod immunization".
- A strategy that matches the durations of assets and liabilities thereby minimizing the impact of interest rates on the net worth.
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Impact Day
- The day that a corporation has a secondary offering of shares to the public.
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Impact Fee
- A fee imposed on property developers by municipalities for the new infrastructure that must be built or increased due to new property development. These fees are designed to offset the impact of additional development and residents on the municipality's infrastructure and services, which include the city's water and sewer network, police and fire protection services, schools and libraries.
These fees can also be levied against any individual or entity where its actions create an externality within a municipality.
- A fee imposed on property developers by municipalities for the new infrastructure that must be built or increased due to new property development. These fees are designed to offset the impact of additional development and residents on the municipality's infrastructure and services, which include the city's water and sewer network, police and fire protection services, schools and libraries.
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Impaired Asset
- A company's asset that is worth less on the market than the value listed on the company's balance sheet. This will result in a write-down of that same asset account to the stated market price.
Accounts that are likely to be written down are the company's goodwill, accounts receivable and long-term assets.
- A company's asset that is worth less on the market than the value listed on the company's balance sheet. This will result in a write-down of that same asset account to the stated market price.
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Impaired Credit
- The deterioration of a borrower's credit rating.
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Impairment
- 1. A reduction in a company's stated capital.
2. The total capital that is less than the par value of the company's capital stock.
- 1. A reduction in a company's stated capital.
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Imperfect Competition
- A type of market that does not operate under the rigid rules of perfect competition. Perfect competition implies an industry or market in which no one supplier can influence prices, barriers to entry and exit are small, all suppliers offer the same goods, there are a large number of suppliers and buyers, and information on pricing and process is readily available. Forms of imperfect competition include monopoly, oligopoly, monopolistic competition, monopsony and oligopsony.
- A type of market that does not operate under the rigid rules of perfect competition. Perfect competition implies an industry or market in which no one supplier can influence prices, barriers to entry and exit are small, all suppliers offer the same goods, there are a large number of suppliers and buyers, and information on pricing and process is readily available. Forms of imperfect competition include monopoly, oligopoly, monopolistic competition, monopsony and oligopsony.
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Imperfect Market
- A market where information is not quickly disclosed to all participants in it and where the matching of buyers and sellers isn't immediate. Generally speaking, it is any market that does not adhere rigidly to perfect information flow and provide instantly available buyers and sellers.
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Implementation Lag
- The time lag between when a macroeconomic shock or other adverse condition is recognized by central banks and the government, and when a corrective action is put into place. The response lag may be short or long, depending on whether policy makers have a definite course of action or must deliberate on the right action to take. Also, proper implementation of the corrective action may have to happen incrementally, rather than all at one time.
- The time lag between when a macroeconomic shock or other adverse condition is recognized by central banks and the government, and when a corrective action is put into place. The response lag may be short or long, depending on whether policy makers have a definite course of action or must deliberate on the right action to take. Also, proper implementation of the corrective action may have to happen incrementally, rather than all at one time.
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Implicit Cost
- A cost that is represented by lost opportunity in the use of a company's own resources, excluding cash.
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Implicit Rental Rate
- The opportunity costs that a firm incurs as a result of using their own assets for ongoing operations instead of other alternative uses. The implicit rental rate can be either greater than or less than the firm's cost of capital.
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Implied Call
- A right given to mortgage borrowers that allows them to call or pay-back a loan at any time. The call is implied, as it is included in most mortgages unless specified otherwise.
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Implied Rate
- An interest rate that is determined by the difference between the spot rate and the forward/futures rate. The degree of relative costliness of a future rate can be assessed by comparing the implied rate with the spot rate.
Calculated as:
- An interest rate that is determined by the difference between the spot rate and the forward/futures rate. The degree of relative costliness of a future rate can be assessed by comparing the implied rate with the spot rate.
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Implied Repo Rate
- The rate of return that can be earned by simultaneously selling a bond futures or forward contract and then buying an actual bond of equal amount in the cash market using borrowed money. The bond is held until it is delivered into the futures or forward contract and the loan is repaid.
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Implied Volatility - IV
- The estimated volatility of a security's price. In general, implied volatility increases when the market is bearish and decreases when the market is bullish. This is due to the common belief that bearish markets are more risky than bullish markets.
Implied volatility is sometimes referred to as "vols."
- The estimated volatility of a security's price. In general, implied volatility increases when the market is bearish and decreases when the market is bullish. This is due to the common belief that bearish markets are more risky than bullish markets.
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Import
- In reference to international trade, these are goods brought into one country from another.
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Import And Export Prices
- Two indexes that monitor the prices of imports and exports in the United States. The import and export prices indexes are created by compiling the prices of goods purchased in the U.S. but produced out of country (imports) and the prices of goods purchased out of country but produced in the U.S. (exports).
- Two indexes that monitor the prices of imports and exports in the United States. The import and export prices indexes are created by compiling the prices of goods purchased in the U.S. but produced out of country (imports) and the prices of goods purchased out of country but produced in the U.S. (exports).
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Impose
- The act of placing a fee, levy, tax or charge on an asset or transaction to the detriment of the investor. The imposition of fees is a common practice in most investment products and services, and may be used as a deterrent to selling or exiting a financial position early.
- The act of placing a fee, levy, tax or charge on an asset or transaction to the detriment of the investor. The imposition of fees is a common practice in most investment products and services, and may be used as a deterrent to selling or exiting a financial position early.
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Impound
- An account maintained by mortgage companies to collect amounts such as hazard insurance, property taxes, private mortgage insurance and other required payments from the mortgage holders; these payments are necessary to keep the home but are not technically part of the mortgage. Impound accounts are often required of borrowers who put down less than 20%, but are usually optional in other cases. The purpose of the impound account is to protect the lender. Because low down-payment borrowers are considered high risk, the impound account assures the lender that the borrower will not lose the home because of liens or loss, as the lender pays insurance, taxes, etc. from the impound account when they are due.
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Impression
- An advertisement's (usually a banner ad) appearance on a web page. Ad space is often sold on a CPM basis.
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Impulse Wave Pattern
- A term used in the Elliott wave theory to describe the strong move in a stock's price coinciding with the main direction of the underlying trend. These impulse waves are shown in the illustration below as wave 1, wave 3 and wave 5. Impulse waves also refer to the strong downward movements in a downtrend.
- A term used in the Elliott wave theory to describe the strong move in a stock's price coinciding with the main direction of the underlying trend. These impulse waves are shown in the illustration below as wave 1, wave 3 and wave 5. Impulse waves also refer to the strong downward movements in a downtrend.
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Imputed Interest
- A term used to describe interest that is considered to be paid, even through no interest payment has been made.
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In And Out
- The purchase and sale of a security within a short period of time, usually on the same day.
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In Play
- A slang phrase used to describe a firm who has become a potential takeover target or has put itself up for sale. Once a bid is made, a company is put "in play" and will often attract additional bidders.
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In Sight
- A term describing deliverable grades of commodities underlying futures contracts that are held in approved delivery facilities near terminals, centralized locations or production areas.
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In Specie
- A phrase describing the distribution of an asset in its present form, rather than selling it and distributing the cash. In specie distribution is made when cash is not readily available, or allocating the physical asset is the better alternative.
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In Street Name
- A brokerage account where the customer's securities and assets are held under the name of the brokerage firm, rather than the name of the individual who purchased the security or asset. Although the name on the certificate is not that of the individual, they are still listed as the real and beneficial owner and have the rights associated with the security.
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In The Money
- 1. For a call option, when the option's strike price is below the market price of the underlying asset.
2. For a put option, when the strike price is above the market price of the underlying asset.
- 1. For a call option, when the option's strike price is below the market price of the underlying asset.
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In The Penalty Box
- When a company's stock price is in the doldrums and has yet to rebound because of poor earnings, government regulation or another reason.
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In The Pink
- An informal expression used to describe a situation in which an investor or an economy is in a good financial position. More generally, it refers to being in the best of health or condition.
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In-House
- Conducting an activity or operation within a company, instead of relying on outsourcing. A firm uses its own employees and time to keep a division or business activity, such as financing or brokering, in-house.
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In-House Financing
- A type of seller financing in which a firm extends customers a loan, allowing them to purchase its goods or services. In-house financing eliminates the firm's reliance on the financial sector for providing the customer with funds to complete a transaction.
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In-Service Withdrawal
- A withdrawal made from a qualified plan account before the holder experiences a triggering event. A triggering event, such as reaching a certain age, or leaving an employer, is often needed to be able to withdraw funds from a plan, such as a 401(k).
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Inactivity Fee
- A fee charged to investors whose trading activity meets their brokerages' criteria for an inactive account.
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Inbound Cash Flow
- Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow can include sales revenue generated through business operations, refunds received from suppliers, financing transactions and amounts won through legal proceedings.
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Incentive Distribution Rights - IDRs
- These give a limited partnership's general partner an increasing share in the incremental distributable cash flow the partnership generates. This occurs alongside of per-unit distribution increases to the limited partners. The general partner's share of incremental distributable cash flow usually starts at 2% and climbs to higher levels such as 20% or 50%.
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Incentive Stock Option - ISO
- A type of employee stock option with a tax benefit, when you exercise, of not having to pay ordinary income tax. Instead, the options are taxed at a capital gains rate.
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Incentive Trust
- A legally binding fiduciary relationship in which the trustee holds and manages the assets contributed to the trust by the grantor. In an incentive trust arrangement, the trustee must adhere to specific requirements set out by the grantor regarding what conditions the trust's beneficiaries must meet in order to receive funds from the trust.
- A legally binding fiduciary relationship in which the trustee holds and manages the assets contributed to the trust by the grantor. In an incentive trust arrangement, the trustee must adhere to specific requirements set out by the grantor regarding what conditions the trust's beneficiaries must meet in order to receive funds from the trust.
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Incidental Expenses
- Expenses including fees and tips for porters, baggage handlers and other personal service employees. These expenses are part of the "meals and incidental expenses reimbursement" rates provided by the IRS. Unreimbursed incidental expenses are deductible according to a schedule prescribed by the IRS.
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Incidents Of Ownership
- Any interests or rights that an individual maintains in an asset, including property and insurance, that allow the person to change, modify, use or benefit from that asset. This is important for determining estate taxes. An individual can reduce the size of his or her estate by gifting assets to beneficiaries but, to avoid estate tax on the gift, the original owner must not retain any incidents of ownership in the gifted assets.
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Incipient Default
- When a borrower appears to be heading toward defaulting on its debt. An incipient default is the foreshadowing of a person or company's inability to service a debt obligation.
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Income
- Economic wealth that is generated in exchange for an individual's performance of agreed upon activities or through investing capital. Income is consumed to fuel day-to-day expenditures.
In businesses, income can refer to a company's remaining revenues after all expenses and taxes have been paid. In this case, it is also known as "earnings".
- Economic wealth that is generated in exchange for an individual's performance of agreed upon activities or through investing capital. Income is consumed to fuel day-to-day expenditures.
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Income Annuity
- Annuities designed to start paying income as soon as the policy is initiated. The income annuity is annuitized immediately, although the underlying income units may be in either fixed or variable investments. As such, the income payments may fluctuate over time.
An income annuity is typically purchased with a lump sum payment, often by people who are at or near retirement.
Also known as an "immediate annuity".
- Annuities designed to start paying income as soon as the policy is initiated. The income annuity is annuitized immediately, although the underlying income units may be in either fixed or variable investments. As such, the income payments may fluctuate over time.
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Income Basket
- Categories for which various sources of income are allocated based on United States tax regulations. Each basket has a net gain or loss, which may not be applied to any other basket as a means to reduce taxable gains.
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Income Bond
- A type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments being paid only if the issuing company has enough earnings to pay for the coupon payment.
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Income Deposit Security - IDS
- A security that combines common stock and notes of the issuer to provide regular income payments to the holder of the security. The holder of the income deposit security receives dividends from the common stock, and fixed income from the debt instrument in the IDS.
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Income Effect
- In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service. The relationship between income and the quantity demanded is a positive one, as income increases, so does the quantity of goods and services demanded.
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Income Elasticity Of Demand
- A measure of the relationship between a change in income and a change in quantity of a good demanded:
- A measure of the relationship between a change in income and a change in quantity of a good demanded:
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Income From Operations - IFO
- The profit realized from a business' own operations.
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Income Fund
- A type of mutual fund that emphasizes current income, either on a monthly or quarterly basis, as opposed to capital appreciation. Such funds hold a variety of government, municipal and corporate debt obligations, preferred stock, money market instruments, and dividend-paying stocks.
- A type of mutual fund that emphasizes current income, either on a monthly or quarterly basis, as opposed to capital appreciation. Such funds hold a variety of government, municipal and corporate debt obligations, preferred stock, money market instruments, and dividend-paying stocks.
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Income In Respect Of A Decedent - IRD
- Money that was due to a decedent and will pass through to the recipient or estate as income during that tax year. The recipient (beneficiary) must declare the money as income in respect of a decedent (IRD) for any year in which income is received. The estate must also claim the income, but may claim a deduction in the amount of income tax due on the IRD.
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Income Property
- Property bought or developed to earn income through renting, leasing or price appreciation. Income property can be residential or commercial. Residential income property is commonly referred to as "non-owner occupied". A mortgage for a "non-owner occupied" property may carry a higher interest rate than an "owner occupied" mortgage as it is viewed by lenders as a higher risk.
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Income Property Mortgage
- A loan given to an investor to purchase a residential or commercial rental property. Income property mortgages are typically much harder to qualify for and often require a borrower to include estimates of the rental income that will be received from the property. Unlike owner-occupied and single-family residences, there are few government loan programs to assist in the purchase of income properties. This leaves investors at the mercy of private lenders, who themselves are at the mercy of the credit markets.
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Income Risk
- The risk that the income stream paid by a fund will decrease in response to a drop in interest rates. This risk is most prevalent in money market and other short-term income fund strategies, rather than longer term strategies that lock in interest rates. This is an extension of the interest rate risk on an individual bond.
- The risk that the income stream paid by a fund will decrease in response to a drop in interest rates. This risk is most prevalent in money market and other short-term income fund strategies, rather than longer term strategies that lock in interest rates. This is an extension of the interest rate risk on an individual bond.
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Income Share
- A class of shares offered by a dual purpose fund that has little room for capital appreciation but gives the holder a portion of all income earned in the portfolio.
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Income Shifting
- A strategy of moving a person's income from a high income bracket or tax rate to a lower one.
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Income Splitting
- A tax reduction strategy employed by families living in areas that are subject to bracketed tax regulations. The goal of using an income-splitting strategy is to reduce the family's gross tax level, at the expense of some family members paying higher taxes than they otherwise would.
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Income Spreading
- A tax reduction strategy that is typically used by people with highly volatile incomes to reduce the overall marginal tax rate paid on a large sum of income. This strategy involves particularly large sources of income and dividing the amount realized over a period of years in order to reduce the overall amount of taxes paid.
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Income Statement
- A financial statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year.
Also known as the "profit and loss statement" or "statement of revenue and expense".
- A financial statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year.
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Income Stock
- An equity security that pays regular, often steadily increasing dividends, and offers a high yield that may generate the majority of overall returns. While there is no specific breakpoint for classification, most income stocks have lower levels of volatility than the overall stock market, and offer higher-than-market dividend yields. Income stocks may have limited future growth options, thereby requiring a lower level of ongoing capital investment. The excess cash flow from profits can therefore be directed back toward investors on a regular basis.
Income stocks can come from any industry, but are most commonly found as companies operating within real estate (through real estate investment trusts, or REITs), energy sectors, utilities, natural resources and financial institutions.
- An equity security that pays regular, often steadily increasing dividends, and offers a high yield that may generate the majority of overall returns. While there is no specific breakpoint for classification, most income stocks have lower levels of volatility than the overall stock market, and offer higher-than-market dividend yields. Income stocks may have limited future growth options, thereby requiring a lower level of ongoing capital investment. The excess cash flow from profits can therefore be directed back toward investors on a regular basis.
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Income Tax
- A tax that governments impose on financial income generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and serve the public.
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Income Tax Payable
- A type of account in the current liabilities section of a company's balance sheet. This account is comprised of taxes that must be paid to the government within one year. Income tax payable is calculated according to the prevailing tax law in the company's home country.
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Income Trust
- An investment trust that holds income-producing assets. The income is passed on to the unit holders.
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Incontestability Clause
- A clause in most life insurance policies that prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed. A typical incontestability clause specifies that a contract will not be voidable after two or three years due to a misstatement.
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Inconvertible Currency
- A situation where one currency cannot be exchanged for another currency because of foreign exchange regulations or physical barriers. Inconvertible currencies may be restricted from trade due to extremely high volatility or political sanctions.
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Incorporated Trustee
- A corporation, usually a trust company, which is named as the trustee of a private trust or other fiduciary account. Incorporated trustees stand in contrast to an individual person or "natural trustee," who may also be selected as the trustee of such an account. In both cases, the trustee's role is to execute the instructions of the trust's grantor as well as manage the assets of the trust.
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Incorporation
- The process of legally declaring a corporate entity as separate from its owners. Incorporation has many advantages for a business and its owners, including:
1) Protects the owner's assets against the company's liabilities
2) Allows for easy transfer of ownership to another party
3) Achieves a lower tax rate than on personal income
4) Receives more lenient tax restrictions on loss carry forwards
5) Can raise capital through the sale of stock
Incorporation involves drafting an "Articles of Incorporation", which lists the primary purpose of the business and its location, along with the number of shares and class of stock being issued, if any. Incorporation will also involve state-specific registration information and fees.
- The process of legally declaring a corporate entity as separate from its owners. Incorporation has many advantages for a business and its owners, including:
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Incoterms
- Trade terms, published by the International Chamber of Commerce (ICC), that are commonly used in international contracts.
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Incremental Capital Output Ratio - ICOR
- A metric that assesses the marginal amount of investment capital necessary for an entity to generate the next unit of production. Overall, a higher ICOR value is not preferred because it indicates that the entity's production is inefficient. The measure is used predominantly in determining a country's level of production efficiency.
ICOR is calculated as:
- A metric that assesses the marginal amount of investment capital necessary for an entity to generate the next unit of production. Overall, a higher ICOR value is not preferred because it indicates that the entity's production is inefficient. The measure is used predominantly in determining a country's level of production efficiency.
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Incremental Cash Flow
- The additional operating cash flow that an organization receives from taking on a new project. A positive incremental cash flow means that the company's cash flow will increase with the acceptance of the project.
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Incremental Cost
- The encompassing change that a company experiences within its balance sheet due to one additional unit of production.
Also referred to as "marginal cost".
- The encompassing change that a company experiences within its balance sheet due to one additional unit of production.
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Incremental Dividend
- A series of regular increases to a corporation's dividend. Many large corporations choose to incorporate an incremental dividend policy because it illustrates the company's ability to continually increase the value to shareholders and is often a useful method used to maintain the interest of many income investors for the long run.
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Incremental Tax
- A tax that increases in increments based on income levels. Incremental taxes must be considered when evaluating new investment opportunities, especially for individuals or companies in the upper end of their current tax brackets.
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Incubated Fund
- A fund that is offered privately when it is first created. Investors of this type of fund are usually employees associated with the fund and their family members. Incubation allows fund managers to keep a fund's size small while testing different investment styles before the fund is available to the public and subject to rules and regulations.
These types of funds are never officially called "incubated," but are instead called "limited distribution" funds.
- A fund that is offered privately when it is first created. Investors of this type of fund are usually employees associated with the fund and their family members. Incubation allows fund managers to keep a fund's size small while testing different investment styles before the fund is available to the public and subject to rules and regulations.
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Incubation
- A trial process in which a fund company operates a number of funds privately with its own capital or employee capital, and only opens the top performing funds to the public. The higher performing funds that survive the incubation period are used by the fund company to generate business. The funds with unattractive performance, which would be more difficult to market, are liquidated.
See also "incubated fund."
- A trial process in which a fund company operates a number of funds privately with its own capital or employee capital, and only opens the top performing funds to the public. The higher performing funds that survive the incubation period are used by the fund company to generate business. The funds with unattractive performance, which would be more difficult to market, are liquidated.
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Incubator Firm
- A firm engaged in the business of fostering early-stage companies through the developmental phases until such time as the company has sufficient financial, human and physical resources to function on its own.
The firm can be either a non-profit or a for-profit entity, and it can provide assistance via any or all of the following methods: 1. access to financial capital through relationships with financial partners, 2. access to experienced business consultants and management-level executives, 3. access to physical location space and business hardware or software and 5. access to informational and research resources via relationships with local universities and government entities.
- A firm engaged in the business of fostering early-stage companies through the developmental phases until such time as the company has sufficient financial, human and physical resources to function on its own.
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Incumbency Certificate
- An official document that lists the names of incumbent individuals and their respective corporate office within an organization.
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Incumbent
- An individual that is responsible for a specific office within a corporation.
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Incurred But Not Reported
- A type of account frequently used in the insurance industry to refer to reserves that are established for claims and/or events that have transpired, but have not yet been reported to an insurance company. In these instances, an actuary will estimate the potential damages to a region; the insurance company may decide to set up reserves to allocate funds to those expected losses. To an actuary, these types of events and losses are said to have been incurred, but not reported.
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Indemnity
- A contractual agreement made between different parties to compensate for any damages or losses.
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Indemnity Insurance
- An insurance policy that aims to protect business owners and employees when they are found to be at fault for a specific event such as misjudgment. Typical examples of indemnity insurance include professional insurance policies such as malpractice insurance and errors and omissions insurance, which indemnifies the professional against claims made in the workplace.
Health indemnity insurance is sometimes used when a person is in between health plans, and will cover some (but not all) expenses.
- An insurance policy that aims to protect business owners and employees when they are found to be at fault for a specific event such as misjudgment. Typical examples of indemnity insurance include professional insurance policies such as malpractice insurance and errors and omissions insurance, which indemnifies the professional against claims made in the workplace.
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Indenture
- A contract between an issuer of bonds and the bondholder stating the time period before repayment, amount of interest paid, if the bond is convertible (and if so, at what price or what ratio), if the bond is callable and the amount of money that is to be repaid.
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Independent 401(k)
- A 401(k) plan set up for an individual running a sole proprietorship or a small business with a spouse/immediate family member. Plan contribution limits for the individual are equal to a typical company-sponsored 401(k), but the sole proprietor can also make an employer contribution to an independent 401(k), thereby raising the total contribution allowed.
The independent 401(k) may also be called a "solo 401(k)" or an "indie K".
- A 401(k) plan set up for an individual running a sole proprietorship or a small business with a spouse/immediate family member. Plan contribution limits for the individual are equal to a typical company-sponsored 401(k), but the sole proprietor can also make an employer contribution to an independent 401(k), thereby raising the total contribution allowed.
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Independent Auditor
- An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report.
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Independent Community Bankers Of America - ICBA
- A domestic trade organization that represents about 5,000 small to mid-sized community banks. The Independent Community Bankers of America (ICBA) provides various benefits to its members, such as conferences and publications, as well as a voice on Capitol Hill. The ICBA represents members holding over $1 trillion assets and $700 billion in loans.
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Independent Contractor
- A self-employed taxpayer that controls his or her own employment circumstances, including when and how work is done. Independent contractors are not considered to be employees and must pay their own Social Security tax.
It is up to the employer to correctly classify each worker as either an independent contractor or an employee.
- A self-employed taxpayer that controls his or her own employment circumstances, including when and how work is done. Independent contractors are not considered to be employees and must pay their own Social Security tax.
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Index
- A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage change is more important than the actual numeric value.
Stock and bond market indexes are used to construct index mutual funds and exchange-traded funds (ETFs) whose portfolios mirror the components of the index.
- A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage change is more important than the actual numeric value.
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Index Amortizing Note - IAN
- A type of structured note whose payment schedule is determined by the behavior of interest rates.
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Index Amortizing Swap
- A swap whereby the notional principal amount of the agreement is amortized according to the movement of an underlying rate.
Also known as "indexed principal swap."
- A swap whereby the notional principal amount of the agreement is amortized according to the movement of an underlying rate.
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Index Arbitrage
- An investment strategy that attempts to profit from the differences between actual and theoretical futures prices of the same stock index. This is done by simultaneously buying (or selling) a stock index future while selling (or buying) the stocks in that index.
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Index Divisor
- A number used in the denominator of the ratio between the total value of an index and the index divisor. The number, which typically has little mathematical rationale behind it, remains consistent and therefore enables comparability within the index over time.
How the value of the index is computed depends on the type of index under consideration.
- A number used in the denominator of the ratio between the total value of an index and the index divisor. The number, which typically has little mathematical rationale behind it, remains consistent and therefore enables comparability within the index over time.
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Index ETF
- Exchange-traded funds that follow a specific benchmark index as closely as possible. Index ETFs are much like index mutual funds, but whereas the mutual fund shares can only be redeemed at one price daily, the closing net asset value (NAV), index ETFs can be bought and sold throughout the day on exchanges. Through an index ETF, investors get exposure to a large number of securities in a single transaction. Index ETFs can cover U.S. and foreign markets, specific sectors, or a specific class of stock (i.e. small-caps, ADRs, etc.) but all incorporate a passive investment strategy, only making portfolio changes when changes occur in the underlying index.
- Exchange-traded funds that follow a specific benchmark index as closely as possible. Index ETFs are much like index mutual funds, but whereas the mutual fund shares can only be redeemed at one price daily, the closing net asset value (NAV), index ETFs can be bought and sold throughout the day on exchanges. Through an index ETF, investors get exposure to a large number of securities in a single transaction. Index ETFs can cover U.S. and foreign markets, specific sectors, or a specific class of stock (i.e. small-caps, ADRs, etc.) but all incorporate a passive investment strategy, only making portfolio changes when changes occur in the underlying index.
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Index Fund
- A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.
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Index Futures
- A futures contract on a stock or financial index. For each index there may be a different multiple for determining the price of the futures contract.
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Index Hugger
- A managed mutual fund that tends to perform much like a benchmark index such as the S&P 500, which gives it the reputation of being a "closet index fund."The majority of actively managed funds are expected to outperform the so-called average performance produced by passively managed index funds.
Also known as a "closet tracker" or "pseudo tracker".
- A managed mutual fund that tends to perform much like a benchmark index such as the S&P 500, which gives it the reputation of being a "closet index fund."The majority of actively managed funds are expected to outperform the so-called average performance produced by passively managed index funds.
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Index Option
- A call or put option on a financial index.
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Index Roll
- A passive index investing strategy that is established by using a combination of index funds and long-term equity anticipation securities (LEAPS). The investor must roll over a series of LEAP options in an attempt to gain exposure to a long-term move in an index. The leverage from the options allows the investor to magnify gains and can result in outperforming an index over the long run.
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Index-Linked Bond
- A bond in which payment of income on the principal is related to a specific price index, often the Consumer Price Index. This feature provides protection to investors by shielding them from changes in the underlying index. The bond's cash flows are adjusted to ensure that the holder of the bond receives a known real rate of return.
In Canada, they also referred to as "real return bonds".
- A bond in which payment of income on the principal is related to a specific price index, often the Consumer Price Index. This feature provides protection to investors by shielding them from changes in the underlying index. The bond's cash flows are adjusted to ensure that the holder of the bond receives a known real rate of return.
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Index-Linked Certificate Of Deposit
- A certificate of deposit (CD) with a return based on a specific index. These CDs are purchased for a fixed price. There is a chance for a high return, depending on the outcome of the index, and there is no risk of a loss as the CD is FDIC insured.
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Indexed Annuity
- A special class of annuities that yields returns on your contributions based on a specified equity-based index. These annuities can be purchased from an insurance company, and similar to other types of annuities, the terms and conditions associated with payouts will depend on what is stated in the original annuity contract.
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Indexed ARM
- An adjustable-rate mortgage on which the interest rate adjusts periodically according to an underlying benchmark index plus a margin. An adjustable-rate mortgage contract states which index will be used, how often the interest rate will adjust and usually sets a limit on the maximum amount the interest rate can adjust upward over the life of the mortgage. Some adjustable-rate mortgages also have limits on the amount the interest rate can adjust at each interest rate adjustment date.
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Indexed Certificate Of Deposit - Indexed CD
- A savings certificate entitling the bearer to receive an interest rate that is indexed to inflation. The indexed certificate of deposit (indexed CD) yields a rate of return that is linked to a stock market index, such as the S&P 500 or the NASDAQ 100.
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Indexed Rate
- An interest rate charged on loans to borrowers that is calculated by taking the sum of a benchmark index interest rate and a specified margin. The indexed rate is used to calculate the interest rate on an adjustable-rate mortgage (ARM). The benchmark index rate is a variable rate, while the specified margin remains fixed.
On an ARM with an initial fixed interest rate, commonly known as a "hybrid ARM" or "fixed-period ARM", the term "indexed rate" is most often called the "fully indexed rate".
- An interest rate charged on loans to borrowers that is calculated by taking the sum of a benchmark index interest rate and a specified margin. The indexed rate is used to calculate the interest rate on an adjustable-rate mortgage (ARM). The benchmark index rate is a variable rate, while the specified margin remains fixed.
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Indexing
- 1. The adjustment of the weights of assets in an investment portfolio so that its performance matches that of an index.
2. Linking movements of rates to the performance of an index.
- 1. The adjustment of the weights of assets in an investment portfolio so that its performance matches that of an index.
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India ETF
- An exchange-traded fund that is based on a basket of securities listed on various exchanges in India. India ETFs aim to capture the major sectors of the Indian economy by owning a diversified mix of major companies that represent the majority of the total market capitalization of the Indian economy.
- An exchange-traded fund that is based on a basket of securities listed on various exchanges in India. India ETFs aim to capture the major sectors of the Indian economy by owning a diversified mix of major companies that represent the majority of the total market capitalization of the Indian economy.
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Indicated Dividend
- The total dividends that would be paid on a share of stock throughout the next year if each dividend is the same amount as the previous payment.
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Indicated Yield
- The yield that a share of stock would return based on its current indicated dividend. It is calculated by dividing the indicated dividend by the current share price. It is usually quoted as a percentage.
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Indication of Interest - IOI
- An underwriting expression showing a conditional, non-binding interest in buying a security that is currently in registration (awaiting effectiveness by the SEC). The investor's broker is required to provide the investor with a preliminary prospectus.
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Indicative Net Asset Value - iNAV
- A measure of the intraday net asset value (NAV) of an investment, such as an exchange-traded fund (ETF), which gives an updated measure of the value of the investment based on its assets less its liabilities. An investment's NAV is usually calculated at the end of the trading day, but the indicative NAV measure gives a more real-time view of this value.
Also referred to as "indicative value".
- A measure of the intraday net asset value (NAV) of an investment, such as an exchange-traded fund (ETF), which gives an updated measure of the value of the investment based on its assets less its liabilities. An investment's NAV is usually calculated at the end of the trading day, but the indicative NAV measure gives a more real-time view of this value.
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Indicative Quote
- In forex trading, a currency quote that is provided by a market maker to a trading party but that is not firm. In other words, when a market maker provides an indicative quote to a trader, the market maker is not obligated to trade the given currency pair at the price or the quantity stated in the quote. Contrast this to a firm quote, in which a market maker guarantees a specified bid or ask price to a trader up to the maximum quantity specified in the quote.
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Indicator
- Statistics used to measure current conditions as well as to forecast financial or economic trends. Indicators are used extensively in technical analysis to predict changes in stock trends or price patterns. In fundamental analysis, economic indicators that quantify current economic and industry conditions are used to provide insight into the future profitability potential of public companies.
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Indifference Curve
- A diagram depicting equal levels of utility (satisfaction) for a consumer faced with various combinations of goods.
- A diagram depicting equal levels of utility (satisfaction) for a consumer faced with various combinations of goods.
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Indirect Loan
- Any loan that is transferred from a dealer who originated the loan to a third party. Any buyer of indirect loans is known as a holder in due course and is now entitled to receive principal and interest payments.
An example of an indirect loan is a car loan offered to a customer at a dealership which is then purchased by the third party at a discount. In this example, the third party never met the borrower but is now entitled to received payments from the loan.
- Any loan that is transferred from a dealer who originated the loan to a third party. Any buyer of indirect loans is known as a holder in due course and is now entitled to receive principal and interest payments.
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Indirect Method
- A method for creating a statement of cash flows a company may use during any given reporting period. The indirect method uses accrual accounting information to present the cash flows from the operations section of the cash flow statement.
Under both the direct and indirect methods the remaining two sections of the cash flow statement, cash provided from investing and financing activities will be identical.
- A method for creating a statement of cash flows a company may use during any given reporting period. The indirect method uses accrual accounting information to present the cash flows from the operations section of the cash flow statement.
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Indirect Quote
- A foreign exchange rate quoted as the foreign currency per unit of the domestic currency. In an indirect quote, the foreign currency is a variable amount and the domestic currency is fixed at one unit.
- A foreign exchange rate quoted as the foreign currency per unit of the domestic currency. In an indirect quote, the foreign currency is a variable amount and the domestic currency is fixed at one unit.
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Indirect Rollover
- A method of transferring assets from a tax-deferred 401(k) plan to a traditional individual retirement account (IRA). With this method, the funds are actually given to the employee via check to be deposited into their own personal account. With an indirect rollover, it is then up to the employee to redeposit the funds into the new IRA within the allotted 60 day period to avoid penalty.
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Indirect Tax
- A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products.
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Individual Development Account - IDA
- A savings account for lower income individuals. An IDA is used for a specific purpose such as education, purchasing a first home, or starting a business. Savings are matched by private or public funds.
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Individual Retirement Account - IRA
- An investing tool used by individuals to earn and earmark funds for retirement savings. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.
Traditional and Roth IRAs are established by individual taxpayers, who are allowed to contribute 100% of compensation (self-employment income for sole proprietors and partners) up to a set maximum dollar amount. Contributions to the Traditional IRA may be tax deductible depending on the taxpayer's income, tax filing status and coverage by an employer-sponsored retirement plan. Roth IRA contributions are not tax-deductible.
SEPs and SIMPLEs are retirement plans established by employers. Individual participant contributions are made to SEP IRAs and SIMPLE IRAs.
Also referred to as "individual retirement arrangements."
- An investing tool used by individuals to earn and earmark funds for retirement savings. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.
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Individual Retirement Annuity
- A retirement investment vehicle that is structured similarly to a individual retirement account (IRA), except that in this instance, an annuity contract must be purchased, subject to a number of conditions which must be met. An individual retirement annuity must be issued in the owner's name, and only the annuity owner or their surviving beneficiaries are eligible to receive benefits from the contract. Annuity payments may be made by persons other than the primary holder.
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Individual Transfer Quota - ITQ
- A quota, imposed on individuals or firms by a governing body, that limits the production of a good or service. If the entity does not produce the maximum amount as set out by the quota, they may transfer the remaining portion of the quota to another party.
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Induced Taxes
- Within the context of macroeconomics and fiscal policy, a type of tax that changes when an economy's real gross domestic product (GDP) changes. The relationship between induced taxes and GDP is positive; as real GDP rises, taxes will also rise, and visa versa.
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Industrial Bank
- A financial institution with a limited scope of services. Industrial banks sell certificates that are labeled as investment shares and also accept customer deposits. They then invest the proceeds in installment loans for consumers and small businesses. These banks are also known as Morris banks or industrial loan companies.
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Industrial Development Revenue Bonds - IDRBs
- Municipal debt securities issued by a government agency on behalf of a private sector company and intended to build or acquire factories or other heavy equipment and tools.
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Industrial Production Index - IPI
- An economic indicator that is released monthly by the Federal Reserve Board. The indicator measures the amount of output from the manufacturing, mining, electric and gas industries. The reference year for the index is 2002 and a level of 100.
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Industrial Revolution
- A period of major industrialization that took place during the late 1700s and early 1800s. The Industrial Revolution, beginning in Great Britain, quickly spread throughout the world. This time period saw the mechanization of agriculture and textile manufacturing and a revolution in power (i.e., steam ships and railroads) and had a massive effect on social, cultural and economic conditions.
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Industrialization
- The process in which a society or country (or world) transforms itself from a primarily agricultural society into one based on the manufacturing of goods and services. Individual manual labor is often replaced by mechanized mass production and craftsmen are replaced by assembly lines. Characteristics of industrialization include the use of technological innovation to solve problems as opposed to superstition or dependency upon conditions outside human control such as the weather, as well as more efficient division of labor and economic growth.
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Industry
- A classification that refers to a group of companies that are related in terms of their primary business activities. In modern economies, there are dozens of different industry classifications, which are typically grouped into larger categories called sectors.
Individual companies are generally classified into industries based on their largest sources of revenue. For example, an automobile manufacturer might have a small financing division that contributes 10% to overall revenues, but the company will still be universally classified as an auto maker for attribution purposes.
- A classification that refers to a group of companies that are related in terms of their primary business activities. In modern economies, there are dozens of different industry classifications, which are typically grouped into larger categories called sectors.
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Industry Bet
- When an investor or portfolio manager increases (or decreases) holdings in a particular industry.
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Industry Classification Benchmark - ICB
- A company-classification system for stocks developed by Dow Jones and FTSE. The Industry Classification Benchmark (ICB) is a system that classifies both domestic and international stocks.
Every company has a place in the ICB, which has a four-tier, hierarchical industry-classification structure. The ICB uses a system of 10 industries, partitioned into 18 supersectors, which are further divided into 39 sectors, which in turn contain 104 subsectors.
- A company-classification system for stocks developed by Dow Jones and FTSE. The Industry Classification Benchmark (ICB) is a system that classifies both domestic and international stocks.
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Industry Group
- A classification method for individual stocks or companies, usually grouped based on common lines of business. Although there is no official standard for industry group classification, Investor's Business Daily has a proprietary model that is popular with 197 industry groups, and Reuter's Baseline uses another, with about 185. Most designations will have somewhere between 150 and 200 industry groups in total, with the sum total of industry groups capturing nearly all of the economy as can be measured by the GDP.
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Industry Life Cycle Analysis
- A form of fundamental analysis involving the process of making investment decisions based on the different stages an industry is at during a given point in time. The type of position taken will depend on firm specific characteristics, as well as where the industry is at in its life cycle.
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Industry Lifecycle
- A concept relating to the different stages an industry will go through, from the first product entry to its eventual decline. There are typically five stages in the industry lifecycle. They are defined as:
i. Early Stages Phase - alternative product design and positioning, establishing the range and boundaries of the industry itself.
ii. Innovation Phase - Product innovation declines, process innovation begins and a "dominant design" will arrive.
iii. Cost or Shakeout Phase - Companies settle on the "dominant design"; economies of scale are achieved, forcing smaller players to be acquired or exit altogether. Barriers to entry become very high, as large-scale consolidation occurs.
iv. Maturity - Growth is no longer the main focus, market share and cash flow become the primary goals of the companies left in the space.
v. Decline - Revenues declining; the industry as a whole may be supplanted by a new one.
- A concept relating to the different stages an industry will go through, from the first product entry to its eventual decline. There are typically five stages in the industry lifecycle. They are defined as:
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Inefficient Market
- A theory which asserts that the market prices of common stocks and similar securities are not always accurately priced and tend to deviate from the true discounted value of their future cash flows. This theory opposes the efficient market hypothesis.
The phrase is also used to refer to a market which is not operating efficiently; for example, it could be argued that the low-volume stocks traded over the counter comprise an inefficient market compared to blue chip stocks.
- A theory which asserts that the market prices of common stocks and similar securities are not always accurately priced and tend to deviate from the true discounted value of their future cash flows. This theory opposes the efficient market hypothesis.
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Inelastic
- An economic term used to describe the situation in which the supply and demand for a good are unaffected when the price of that good or service changes.
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Infant-Industry Theory
- A school of thought that believes emerging domestic industries should be protected until they become stable and mature.
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Infectious Greed
- A phrase used in his July 2002 testimony before the Committee on Banking, Housing and Urban Affairs by former Federal Reserve Board chairman Alan Greenspan to describe the breakdown of corporate governance checks and balances. Mr. Greenspan spoke of this while focusing on reforms of corporate governance to help protect investors.
- A phrase used in his July 2002 testimony before the Committee on Banking, Housing and Urban Affairs by former Federal Reserve Board chairman Alan Greenspan to describe the breakdown of corporate governance checks and balances. Mr. Greenspan spoke of this while focusing on reforms of corporate governance to help protect investors.
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Inferior Good
- A type of good for which demand declines as the level of income or real GDP in the economy increases. This occurs when a good has more costly substitutes that see an increase in demand as the society's economy improves. An inferior good is the opposite of a normal good, which experiences an increase in demand along with increases in the income level.
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Inflation
- The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.
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Inflation Derivatives
- A subclass of derivative that is used by individuals to mitigate the effects of potentially large levels of inflation. The most common type of inflation derivatives are swaps, in which a counterparty's cash flows are linked to a price index and the other counterparty is linked to a conventional fixed or floating cash flow.
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Inflation Targeting
- A central banking policy that revolves around meeting preset, publicly displayed targets for the annual rate of inflation. The benchmark used for inflation targeting is typically a price index of a basket of consumer goods, such as the Consumer Price Index (CPI) in the United States.
Along with inflation target rates and calendar dates to be used as performance measures, an inflation targeting policy may also have established steps that are to be taken depending on how much the actual inflation rate varies from the targeted level, such as cutting lending rates or adding liquidity to the economy.
- A central banking policy that revolves around meeting preset, publicly displayed targets for the annual rate of inflation. The benchmark used for inflation targeting is typically a price index of a basket of consumer goods, such as the Consumer Price Index (CPI) in the United States.
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Inflation-Adjusted Return
- A measure of return that accounts for the return period's inflation rate. Inflation-adjusted return reveals the return on an investment after removing the effects of inflation.
It is calculated as follows:
Also, a simple approximation for inflation-adjusted return is given by subtracting the inflation rate from the rate of return.
- A measure of return that accounts for the return period's inflation rate. Inflation-adjusted return reveals the return on an investment after removing the effects of inflation.
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Inflation-Indexed Security
- A security that guarantees a return higher than the rate of inflation if it is held to maturity.
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Inflation-Linked Certificates of Deposit
- Federally insured debt securities that are similar to regular certificates of deposit (CDs), but provide investors with inflationary protection via annually variable interest rates that increase or decrease with changes in the consumer price index, a measure of inflation.
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Inflation-Linked Savings Bonds (I Bonds)
- U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, as their yields are tied to the inflation rate.
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Inflation-Protected Annuity - IPA
An annuity investment that guarantees a real rate of return at or above inflation. The real rate of return is the nominal return, less the inflation rate, thus protecting annuitants and beneficiary investors from inflation.
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Inflation-Protected Security - IPS
- A type of fixed-income investment that guarantees a real rate of return. The real rate of return is the nominal return, less the inflation rate, thus protecting investors from inflation.
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Inflationary Gap
- A macroeconomic condition that describes the distance between the current level of real gross domestic product (GDP) and full employment (long run equilibrium) real GDP. The inflationary gap is so named because the relative increase in real GDP causes an economy to increase its consumption, which causes prices to rise in the long run.
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Inflationary Psychology
- The relationship between inflation and individuals' behavior.
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Inflationary Risk
- The uncertainty over the future real value (after inflation) of your investment.
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Inflection Point
- An event that changes the way we think and act.
-Andy Grove, Founder of Intel.
- An event that changes the way we think and act.
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Inflexible Expense
- An expense that cannot be easily eliminated by the firm or person incurring the cost. An inflexible expense represents a recurring debt, which may affect the borrower's ability to attain higher levels of credit.
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Information Circular
- A document sent to shareholders outlining important matters to be discussed at the annual shareholders' meeting.
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Information Coefficient - IC
- A correlation value that measures the relationship between a variable's predicted and actual values. The information coefficient is a performance measure used for evaluating the forecasting skill of financial analysts
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Information Ratio - IR
- A ratio of portfolio returns above the returns of a benchmark (usually an index) to the volatility of those returns. The information ratio (IR) measures a portfolio manager's ability to generate excess returns relative to a benchmark, but also attempts to identify the consistency of the investor. This ratio will identify if a manager has beaten the benchmark by a lot in a few months or a little every month. The higher the IR the more consistent a manager is and consistency is an ideal trait.
Rp = Return of the portfolio
Ri = Return of the index or benchmark
Sp-i = Tracking error (standard deviation of the difference between returns of the portfolio and the returns of the index)
- A ratio of portfolio returns above the returns of a benchmark (usually an index) to the volatility of those returns. The information ratio (IR) measures a portfolio manager's ability to generate excess returns relative to a benchmark, but also attempts to identify the consistency of the investor. This ratio will identify if a manager has beaten the benchmark by a lot in a few months or a little every month. The higher the IR the more consistent a manager is and consistency is an ideal trait.
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Informationally Efficient Market
- A theory, which moves beyond the definition of the efficient market hypothesis, that states that new information about any given firm is known with certainty, and is immediately priced into that company's stock.
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Infrastructure
- The basic physical systems of a business or nation.
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Infrastructure Trust
- A type of income trust that exists to finance, construct, own, operate and maintain different infrastructure projects in a given region or operating area. The infrastructure trust will also provide distribution payments to units holders on a periodic basis.
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Ingot
- Gold in bar form.
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Inheritance
- All or part of a person's estate/assets that is given to an heir once the person is deceased.
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Inheritance Tax
- In some states in the U.S. (and in the United Kingdom), a tax imposed on those who inherit assets from a deceased person. The tax rate for inheritance taxes depends on the value of the property received by the heir or beneficiary and his/her relationship to the decedent.
Inheritance tax is known in some countries as a "death duty" and is occasionally called "the last twist of the taxman's knife".
- In some states in the U.S. (and in the United Kingdom), a tax imposed on those who inherit assets from a deceased person. The tax rate for inheritance taxes depends on the value of the property received by the heir or beneficiary and his/her relationship to the decedent.
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Inherited IRA
- An individual retirement account that is left to a beneficiary after the owner's death. If the owner had already begun receiving required minimum distributions (RMDs) at the time of his or her death, the beneficiary must continue to receive the distributions as already calculated or submit a new schedule based on his or her life expectancy.
- An individual retirement account that is left to a beneficiary after the owner's death. If the owner had already begun receiving required minimum distributions (RMDs) at the time of his or her death, the beneficiary must continue to receive the distributions as already calculated or submit a new schedule based on his or her life expectancy.
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Initial Cash Flow
- The amount of money paid out or received at the start of a project or investment. This is generally a negative amount because projects often require a large initial capital investment by a company that will generate positive cash flow over time.
- The amount of money paid out or received at the start of a project or investment. This is generally a negative amount because projects often require a large initial capital investment by a company that will generate positive cash flow over time.
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Initial Claims
- A measurement of the number of jobless claims filed by individuals seeking to receive state jobless benefits. This number is watched closely by financial analysts because it provides insight into the direction of the economy. Higher initial claims positively correlate with a weakening economy, and vice versa for lower initial claims.
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Initial Interest Rate
- The interest rate that is initially assessed on an adjustable-rate mortgage (ARM) and advertised in the origination process. The initial interest rate will be in force for a limited period of time, typically between 12 and 24 months. After this window of time is closed, the interest rate will reset itself to an index plus spread value that is higher than the initial rate.
May also be called a "teaser rate".
- The interest rate that is initially assessed on an adjustable-rate mortgage (ARM) and advertised in the origination process. The initial interest rate will be in force for a limited period of time, typically between 12 and 24 months. After this window of time is closed, the interest rate will reset itself to an index plus spread value that is higher than the initial rate.
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Initial Interest Rate Cap
- The maximum amount the interest rate on an adjustable-rate loan can adjust on its first scheduled adjustment date. This is part of the interest rate cap structure on the loan, usually a mortgage, which helps to give borrowers some protection from payment shock but does limit the benefit from interest rate reductions.
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Initial Margin
- The percentage of the purchase price of securities (that can be purchased on margin) that the investor must pay for with his or her own cash or marginable securities.
Also called the "initital margin requirement".
- The percentage of the purchase price of securities (that can be purchased on margin) that the investor must pay for with his or her own cash or marginable securities.
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Initial Offering Date
- 1. The date at which a security is first made available for public purchase. The initial offering date is set during the underwriting process. For stocks, this marks the date of the initial public offering and the beginning of a quiet period, when insiders and underwriters cannot issue earnings forecasts or research reports on the company. This term also refers to the initial offering of shares in other assets, such as mutual funds and unit investment trusts (UITs).
- 1. The date at which a security is first made available for public purchase. The initial offering date is set during the underwriting process. For stocks, this marks the date of the initial public offering and the beginning of a quiet period, when insiders and underwriters cannot issue earnings forecasts or research reports on the company. This term also refers to the initial offering of shares in other assets, such as mutual funds and unit investment trusts (UITs).
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Initial Public Offering - IPO
- The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.
Also referred to as a "public offering".
- The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
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Initial Rate Period
- The period of an introductory or "teaser" interest rate on a mortgage or other loan. The initial rate period varies by loan type and can be as short as one month or as long as several years. Some loans, such as 2-1 or 3-2-1 buydown mortgages, have initial rate periods during which the interest rate increases incrementally.
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Inland Bill Of Lading
- A legal document required for the transportation of materials over land. An inland bill of lading serves as both the carrier's receipt to the shipper and the carriage contract. The document specifies the details of the goods being transported, such as quantity, type and destination.
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Inorganic Growth
- A growth in the operations of a business that arises from mergers or takeovers, rather than an increase in the companies own business activity. Firms that choose to grow inorganically can gain access to new markets and fresh ideas that become available through successful mergers and acquisitions.
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INR
- The currency abbreviation or currency symbol for the Indian rupee (INR), the currency of India. The rupee is made up of 100 paise and is often presented with the symbol (Rs). The Indian government has decided to find a new symbol for its currency and as of March 5, 2009 has announced a contest to design this symbol.
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INR (Indian Rupee)
- The currency abbreviation or currency symbol for the Indian rupee (INR), the currency of India. The rupee is made up of 100 paise and is often presented with the symbol Rs. The Indian government has decided to find a new symbol for its currency and on March 5, 2009, the goverment announced a contest to design this symbol.
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INSEAD
- One of the world's top graduate business schools, INSEAD has two full campuses in France and Singapore. INSEAD also has a centre in Abu Dhabi and another research facility in Israel. Founded in 1957, INSEAD was originally known as "Institut Européen d'Administration des Affaires." Today INSEAD is world renown as one the the top business schools on the planet.
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Inside Day
- A candlestick formation that occurs when the entire daily price range for a given security falls within the price range of the previous day. Inside day often refers to all versions of the harami pattern and can be very useful for spotting changes in the direction of a trend.
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Inside Director
- Any member of a company's board of directors who is either an employee or stakeholder in the company.
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Inside Market
- The highest quoted bid and the lowest offer price among competing market makers in a security trading on the Nasdaq market.
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Inside Quote
- The highest bid and lowest offer price for a security quoted among all of the market makers competing in a security.
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Insider
- Any person who has knowledge of, or access to, valuable nonpublic information about a corporation.
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Insider Information
- Material information about a company's activities that has not been disclosed to the public.
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Insider Lending
- When a bank makes a loan to one or more of its own officers or directors. Many countries, including the U.S., require that the provisions of these loans match those of comparable bank customers. This is done to ensure fairness and limit the access to bank funds by insiders.
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Insider Trading
- The buying or selling of a security by someone who has access to material, nonpublic information about the security.
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Insider Trading Act of 1988
- An act enabled in 1988 to increase the liability penalties to all involved parties to insider trading. This act was established due to the increase in high profile insider trading cases, as well as the increase in monetary values of the trades. The act allows the SEC to order a penalty of up to three times the profit, and the guilty parties may serve significant jail time according to the extent of their crime.
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Insolvency
- When an individual or organization can no longer meet its financial obligations with its lender or lenders as debts become due. Insolvency can lead to insolvency proceedings, in which legal action will be taken against the insolvent entity, and assets may be liquidated to pay off outstanding debts.
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Inspectorial Powers
- A state administrator’s or other regulatory entity's power to initiate investigations to determine whether provisions of the Uniform Securities Act have been violated or are about to be violated.
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Installment Debt
- Debt issued with the condition of regularly occurring intervals for payment by the debtor, until the principal and interest are paid in full.
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Installment Receipt
- A debt or equity issuance in which the purchaser does not pay the full value of the issue up front. In the purchase of an installment receipt, an initial payment is made to the issuer at the time the issue closes; the remaining balance must be paid in installments, usually within a two-year period . Although the purchaser has not paid the full value of the issue, he or she is still entitled to full voting rights and dividends.
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Installment Sale
- A method of sale that allows for partial deferral of any capital gain to future taxation years. Installment sales require the buyer to make regular payments, or installments, on an annual basis, plus interest if installment payments are to be made in subsequent taxation years.
- A method of sale that allows for partial deferral of any capital gain to future taxation years. Installment sales require the buyer to make regular payments, or installments, on an annual basis, plus interest if installment payments are to be made in subsequent taxation years.
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Instinet
- An electronic securities order matching (trading) and information system that allows members (primarily professional traders and investors) to display bid and offer quotes for stocks, and to transact between themselves using brokers. As a global securities broker, Instinet enables more than 1,500 institutional customers to trade securities in more than 40 global markets.
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Institute For Divorce Financial Analysts - IDFA
- An organization committed to educating financial professionals about specific issues relating to divorce. The Institute for Divorce Financial Analysts certifies members who complete its modular study program, which highlights divorce tax law and asset distribution. People going through a divorce can contact the IDFA, which will help them find a suitable agent to help them through the divorce proceedings.
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Institutional Brokers' Estimate System - IBES
- A system that gathers and compiles the different estimates made by stock analysts on the future earnings for the majority of U.S. publicly traded companies.
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Institutional Fund
- A mutual fund targeting high value investors with low fees, but high minimum requirements.
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Institutional Investor
- A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.
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Institutional Shares
- A class of mutual fund shares available for sale to investing institutions, either on a load or no-load basis. With sizable minimum investments, usually around $500,000 or more, funds will typically waive any front-end sales charges on these shares.
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Instructing Bank
- One of the banks that plays a role in a transfer of funds between two parties. The instructing bank is the one that initiates the fund transfer process. It takes the instructions for the transfer from the customer regarding who receives the funds and the amount to be sent.
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Instrument
- 1) A tradeable asset or negotiable item such as a security, commodity, derivative or index, or any item that underlies a derivative. An instrument is a means by which something of value is transferred, held or accomplished.
2) An economic variable that can be controlled or altered by government policymakers in to cause a desired effect in other economic indicators.
3) A legal document such as a contract, will or deed.
- 1) A tradeable asset or negotiable item such as a security, commodity, derivative or index, or any item that underlies a derivative. An instrument is a means by which something of value is transferred, held or accomplished.
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Insufficient Funds
- Occurs when an account cannot provide adequate funds to satisfy the demand of a payment.
Also referred to as "non-sufficient funds", or "NSF".
- Occurs when an account cannot provide adequate funds to satisfy the demand of a payment.
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Insurance
- A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.
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Insurance Bond
- An investment instrument that is offered by life insurance companies. The investment is provided in the form of a single premium life insurance policy. These bonds are often used as investments in the U.K. and other countries.
Also known as an "investment bond".
- An investment instrument that is offered by life insurance companies. The investment is provided in the form of a single premium life insurance policy. These bonds are often used as investments in the U.K. and other countries.
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Insurance Claim
- A formal request to an insurance company asking for a payment based on the terms of the insurance policy. Insurance claims are reviewed by the company for their validity and then paid out to the insured or requesting party (on behalf of the insured) once approved.
- A formal request to an insurance company asking for a payment based on the terms of the insurance policy. Insurance claims are reviewed by the company for their validity and then paid out to the insured or requesting party (on behalf of the insured) once approved.
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Insurance Derivative
- A financial instrument that derives its value from an underlying insurance index or the characteristics of an event related to insurance. Insurance derivatives are useful for insurance companies that want to hedge their exposure to catastrophic losses due to exceptional events, such as earthquakes or hurricanes.
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Insurance Score
- A rating computed and used by insurance companies that represents the probability of a client filing an insurance claim during his or her coverage. The score is based on the client's credit rating and will impact the premiums he or she pays for the insurance coverage - a higher score will result in lower premiums, and vice versa.
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Insurance Trust
- An irrevocable trust set up with a life insurance policy as the asset, allowing the grantor of the policy to exempt asset away from his or her taxable estate.
Once the life insurance policy is placed in the trust, the insured person no longer owns the policy, which will be managed by the trustee on behalf of the policy beneficiaries when the insured person dies.
The insurance trust, or irrevocable life insurance trust (ILIT), is often used to set aside cash proceeds that can be used to pay estate taxes, as the life insurance policy should be exempt from the taxable estate of the decedent.
- An irrevocable trust set up with a life insurance policy as the asset, allowing the grantor of the policy to exempt asset away from his or her taxable estate.
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Insurance Underwriter
- A financial professional that evaluates the risks of insuring a particular person or asset and uses that information to set premium pricing for insurance policies. Insurance underwriters are employed by insurance companies to help price life insurance, health insurance, property/casualty insurance and homeowners insurance, among others.
Underwriters use computer programs and actuarial data to determine the likelihood and magnitude of a payout over the life of the policy. Higher-risk individuals and assets will have to pay more in premiums to receive the same level of protection as a (perceived) lower-risk person or asset.
- A financial professional that evaluates the risks of insuring a particular person or asset and uses that information to set premium pricing for insurance policies. Insurance underwriters are employed by insurance companies to help price life insurance, health insurance, property/casualty insurance and homeowners insurance, among others.
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Insured Bond
- A bond with interest and principle payments insured by a third party. Insured bonds are usually found as a feature of municipal bonds; they are purchased, underwritten and repackaged by a financial guarantee company who then sells the issue to investors.
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- A bond with interest and principle payments insured by a third party. Insured bonds are usually found as a feature of municipal bonds; they are purchased, underwritten and repackaged by a financial guarantee company who then sells the issue to investors.
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Insured Financial Institution
- Any bank or savings institution that is covered by some form of deposit insurance. Of course, virtually all eligible banks and savings institutions carry this protection. Both state and national banks are required by law to have FDIC coverage.
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Intangible Asset
- An asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset. A company brand name is considered to be an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company enters a legal agreement to operate under another company's patent, with no plans of extending the agreement, it would have a limited life and would be classified as a definite asset.
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Intangible Cost
- An unquantifiable cost relating to an identifiable source. Intangible costs represent a variety of expenses such as losses in productivity, customer goodwill or drops in employee morale. While these costs do not have a firm value, managers often attempt to estimate the impact of the intangibles.
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Intaxification
- Slang that describes the feeling of satisfaction and joy that a tax refund creates in a person. This feeling is somewhat misguided because the tax is only refunded because the person paid too much tax during the previous year.
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Integrated Pension Plan
- A pension plan that is tied to an individual's Social Security payments to determine the total benefit that the plan participant should receive.
The actual amount sent to the recipient in a defined benefit integrated pension may be reduced by a dollar amount equal to all or a percentage of the person's annual Social Security payment.
- A pension plan that is tied to an individual's Social Security payments to determine the total benefit that the plan participant should receive.
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Intellectual Capital
- The value of a company or organization's employee knowledge, business training and any proprietary information that may provide the company with a competitive advantage. Intellectual capital is considered an asset, and can broadly be defined as the collection of all informational resources a company has at its disposal that can be used to drive profits, gain new customers, create new products, or otherwise improve the business.
Some of the subsets of intellectual capital include human capital, information capital, brand awareness and instructional capital.
- The value of a company or organization's employee knowledge, business training and any proprietary information that may provide the company with a competitive advantage. Intellectual capital is considered an asset, and can broadly be defined as the collection of all informational resources a company has at its disposal that can be used to drive profits, gain new customers, create new products, or otherwise improve the business.
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Intellectual Property
- A broad categorical description for the set of intangibles owned and legally protected by a company from outside use or implementation without consent. Intellectual property can consist of patents, trade secrets, copyrights and trademarks, or simply ideas.
The concept of intellectual property relates to the fact that certain products of human intellect should be afforded the same protective rights that apply to physical property. Most developed economies have legal measures in place to protect both forms of property.
- A broad categorical description for the set of intangibles owned and legally protected by a company from outside use or implementation without consent. Intellectual property can consist of patents, trade secrets, copyrights and trademarks, or simply ideas.
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Intelligent ETF
- An exchange-traded fund (ETF) that employs an active investment strategy based on a broad index, such as the S&P 500 or a sector-based index. The fund may choose to exclude some stocks within the index while increasing or decreasing the percentage weighting of other stocks. Most intelligent ETFs carry higher expense ratios than standard ETFs, as well as substantially higher turnover ratios.
Also known as a "smart ETF".
- An exchange-traded fund (ETF) that employs an active investment strategy based on a broad index, such as the S&P 500 or a sector-based index. The fund may choose to exclude some stocks within the index while increasing or decreasing the percentage weighting of other stocks. Most intelligent ETFs carry higher expense ratios than standard ETFs, as well as substantially higher turnover ratios.
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Intentionally Defective Grantor Trust - IDGT
- An estate planning tool used to freeze certain assets of an individual for estate tax purposes, but not for income tax purposes. The intentionally defective trust is created as a grantor trust with a purposeful flaw that ensures that the individual continues to pay income taxes, as income tax laws will not recognize that assets have been transferred away from the individual.
For estate tax purposes, however, the value of the grantor's estate is reduced by the amount of the asset transfer. The individual will "sell" assets to the trust in exchange for a promissory note of some length, such as 10 or 15 years. The note will pay enough interest to classify the trust as above market, but the underlying assets are expected to appreciate at a faster rate.
- An estate planning tool used to freeze certain assets of an individual for estate tax purposes, but not for income tax purposes. The intentionally defective trust is created as a grantor trust with a purposeful flaw that ensures that the individual continues to pay income taxes, as income tax laws will not recognize that assets have been transferred away from the individual.
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Inter-American Development Bank - IDB
- A cooperative development bank founded in 1959 to accelerate the economic and social development of its Latin American and Caribbean member countries. The Inter-American Development Bank is owned by a total of 47 member countries including the United States and some European nations. The IDB assists Latin American and Caribbean countries in formulating development policies and provides financing and technical assistance to achieve environmentally sustainable economic growth, increase competitiveness, enhance social equity, fight poverty, modernize the state, and foster free trade and regional integration.
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Inter-Dealer Broker
- 1. A brokerage firm operating in the bond or OTC derivatives market that acts as an intermediary between major dealers to facilitate inter-dealer trades.
2. A member of the London Stock Exchange who is only permitted to deal with market makers, rather than the public.
- 1. A brokerage firm operating in the bond or OTC derivatives market that acts as an intermediary between major dealers to facilitate inter-dealer trades.
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Inter-Vivos Trust
- A trust created during the lifetime of the trustor.
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Interbank Call Money Market
- A short-term money market, which allows for large financial institutions, such as banks, mutual funds and corporations to borrow and lend money at interbank rates. The loans in the call money market are very short, usually lasting no longer than a week and are often used to help banks meet reserve requirements.
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Interbank Deposits
- Any deposit that is held by one bank for another bank. In most cases, the bank for which the deposit is being held is referred to as the correspondent bank. The interbank deposit arrangement requires that both banks hold a "due to account" for the other.
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Interbank Market
- The financial system and trading of currencies among banks and financial institutions, excluding retail investors and smaller trading parties. While some interbank trading is performed by banks on behalf of large customers, most interbank trading takes place from the banks' own accounts.
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Interbank National Authorization System (INAS)
- A network of banks that are affiliated with Mastercard International. The network facilitates the worldwide exchange of bankcard authorizations between different financial institutions. The network is used for both credit and debit cards bearing the Mastercard logo.
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Interbank Network for Electronic Transfer - INET
- Worldwide network that facilitates the transfer of debit and credit card transactions between financial institutions. INET covers any transaction made by a card bearing the Mastercard logo, debit or credit. INET deals with the actual transfer of funds, while international card authorization system processes the card authorizations.
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Interbank Rate
- The rate of interest charged on short-term loans made between banks. Banks borrow and lend money in the interbank market in order to manage liquidity and meet the requirements placed on them. The interest rate charged depends on the availability of money in the market, on prevailing rates and on the specific terms of the contract, such as term length.
- The rate of interest charged on short-term loans made between banks. Banks borrow and lend money in the interbank market in order to manage liquidity and meet the requirements placed on them. The interest rate charged depends on the availability of money in the market, on prevailing rates and on the specific terms of the contract, such as term length.
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Interchange
- A transfer of information from one computer to another electronically. In business this typically refers to a Electronic Data Interchange (EDI), which is a system used to communicate business and financial transactions between parties. EDI usually takes the form of direct transactions between computers, databases and order systems.
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Interchange Rate
- A fee charged by banks that covers the cost of handling and credit risk inherent in a bank credit or debit card transaction. Interchange fees are usually paid to the bank funding a transaction and thus bearing the risk. The fee itself is calculated based on authorization costs, losses due to fraud and credit and the average bank cost of funds. The interchange rate is revised on a regular basis.
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Intercommodity Spread
- Going long on one futures market in a given delivery month and simultaneously going short on the same commodity and delivery month but a different futures market but with similar underlying asset.
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Intercontinental Exchange - ICE
- A market based in Atlanta, Georgia that facilitates the electronic exchange of energy commodities. ICE operates completely as an electronic exchange, and it is linked directly to individuals and firms looking to trade in oil, natural gas, jet-fuel, emissions, electric power and commodity derivatives.
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Interdealer Quotation System
The exchange system comprised of the Nasdaq (National Association of Securities Dealers Automatic Quotation), Nasdaq small-cap market and the Over-the-Counter Bulletin Board (OTCBB) exchange platforms.
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Interdelivery Spread
- Simultaneously entering a long and short on the same futures contract but with different delivery months in the hopes that the price difference between the two months widens or narrows, depending on the underlying investment.
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Interdistrict Settlement Account
- A clearing account that the Federal Reserve maintains to facilitate fund transfers between the 12 Federal Reserve banks located throughout the country. The account is domiciled in Washington D.C. This account is reserved solely for the use of the 12 member banks.
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Interest
- 1. The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
2. The amount of ownership a stockholder has in a company, usually expressed as a percentage.
Interest is commonly calculated using one of two methods: simple interest calculation, or compound interest calculation.
- 1. The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
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Interest Cost
- The cumulative sum of the amount of interest paid on a loan by a borrower. This amount should include any points paid to reduce the interest rate on a loan, since points are in effect pre-paid interest. Additionally, any negative points or rebates paid by a lender to a borrower should be subtracted from the interest cost as they are in effect a refund of future interest the borrower will pay on the loan.
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Interest Coverage Ratio
- A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period:
- A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period:
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Interest Due
- The portion of a current mortgage payment that is comprised of interest on the remaining principal amount. In a standard amortizing mortgage, the first payments will go mainly toward interest due, with only a small percentage of the payment going toward reducing the principal amount. When the next monthly payment comes around, the interest due will be calculated on the updated principal amount, which will have decreased slightly from the prior month's payment.
As time progresses, the interest due each month should fall as a percentage of the monthly payment, with more money going toward reducing the principal.
- The portion of a current mortgage payment that is comprised of interest on the remaining principal amount. In a standard amortizing mortgage, the first payments will go mainly toward interest due, with only a small percentage of the payment going toward reducing the principal amount. When the next monthly payment comes around, the interest due will be calculated on the updated principal amount, which will have decreased slightly from the prior month's payment.
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Interest Expense
- The amount reported by a company or individual as an expense for borrowed money.
In the U.K. it is called "interest payable".
- The amount reported by a company or individual as an expense for borrowed money.
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Interest Only (IO) Strips
- The interest portion of mortgage, Treasury or bond payments, which is separated and sold individually from the principal portion of those same payments. The periodic payments of several bonds can be "stripped" to form synthetic zero-coupon bonds.
Also, an IO strip might be part of a larger collateralized mortgage obligation (CMO), asset-backed security (ABS) or collateralized debt obligation (CDO) structure.
- The interest portion of mortgage, Treasury or bond payments, which is separated and sold individually from the principal portion of those same payments. The periodic payments of several bonds can be "stripped" to form synthetic zero-coupon bonds.
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Interest Rate
- The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR). The assets borrowed could include, cash, consumer goods, large assets, such as a vehicle or building. Interest is essentially a rental, or leasing charge to the borrower, for the asset's use. In the case of a large asset, like a vehicle or building, the interest rate is sometimes known as the “lease rate”.
- The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR). The assets borrowed could include, cash, consumer goods, large assets, such as a vehicle or building. Interest is essentially a rental, or leasing charge to the borrower, for the asset's use. In the case of a large asset, like a vehicle or building, the interest rate is sometimes known as the “lease rate”.
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Interest Rate Call Option
- An interest rate derivative in which the holder has the right to receive an interest payment based on a variable interest rate, and then subsequently pays an interest payment based on a fixed interest rate. If the option is exercised, the investor who sells the interest rate call option will make a net payment to the option holder.
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Interest Rate Cap Structure
- Limits to the interest rate on an adjustable-rate loan - frequently associated with a mortgage. There are several different types of interest rate cap structures including an initial, periodic and lifetime interest rate cap structure. The initial cap is a value that limits by what amount the interest can adjust at the mortgage’s first interest rate adjustment date. The period cap is a value that limits by what amount the interest rate can adjust at each subsequent adjustment date. The lifetime cap limits the total amount by which the interest rate can adjust over the life of the mortgage.
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Interest Rate Ceiling
- The maximum interest rate that a financial institution can charge a borrower for an adjustable rate mortgage or loan according to the contractual terms of the mortgage or loan. This interest rate is expressed as an absolute percentage.
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Interest Rate Collar
- An investment strategy that uses derivatives to hedge an investor's exposure to interest rate fluctuations. The investor purchases an interest rate ceiling for a premium, which is offset by selling an interest rate floor. This strategy protects the investor by capping the maximum interest rate paid at the collar's ceiling, but sacrifices the profitability of interest rate drops.
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Interest Rate Differential - IRD
- A differential measuring the gap in interest rates between two similar interest-bearing assets. Traders in the foreign exchange market use interest rate differentials (IRD) when pricing forward exchange rates. Based on the interest rate parity, a trader can create an expectation of the future exchange rate between two currencies and set the premium (or discount) on the current market exchange rate futures contracts.
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Interest Rate Floor
- An over-the-counter investment instrument that protects the floor buyer from losses resulting from a decrease in interest rates. The floor seller compensates the buyer with a payoff when the reference interest rate falls below the floor's strike rate.
- An over-the-counter investment instrument that protects the floor buyer from losses resulting from a decrease in interest rates. The floor seller compensates the buyer with a payoff when the reference interest rate falls below the floor's strike rate.
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Interest Rate Options
- An investment tool whose payoff depends on the future level of interest rates. Interest rate options are both exchange traded and over-the-counter instruments.
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Interest Rate Parity
- A theory that the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. Interest rate parity plays an essential role in foreign exchange markets, connecting interest rates, spot exchange rates and foreign exchange rates.
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Interest Rate Risk
- The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship. Such changes usually affect securities inversely and can be reduced by diversifying (investing in fixed-income securities with different durations) or hedging (e.g. through an interest rate swap).
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Interest Rate Sensitivity
- A measure of how much the price of a fixed-income asset will fluctuate as a result of changes in the interest rate environment. Securities that are more sensitive will have greater price fluctuations than those with less sensitivity. This type of sensitivity must be taken into account when selecting a bond or other fixed-income instrument that the investor may sell in the secondary market.
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Interest Rate Swap
- An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for another based on a specified principal amount. Interest rate swaps often exchange a fixed payment for a floating payment that is linked to an interest rate (most often the LIBOR). A company will typically use interest rate swaps to limit or manage exposure to fluctuations in interest rates, or to obtain a marginally lower interest rate than it would have been able to get without the swap.
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Interest Sensitive Assets
- Assets held by a bank that are vulnerable to changes in interest rates. This change can occur either when the asset matures or when it is repriced according to an index rate. The value of these assets is adjusted according to the rise or fall of a published rate or index
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Interest Sensitive Liabilities
- Any type of short-term deposit held by a bank that pays a variable rate of interest to the customer. Interest sensitive liabilities make up a significant amount of the assets of most banks. These liabilities include money market certificates, savings accounts and the Super NOW account.
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Interest Sensitive Stock
- Any stock with a price that is extremely sensitive to changes in interest rates.
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Interest Shortfall
- Any interest that has not been paid after the loan payments have been paid. An interest shortfall occurs when the loan accrues interest that has not been figured into the actual immediate payment. Adjustable-rate mortgages have interest shortfalls if their payments or interest rates are capped, leading to negative amortization.
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Interest-On-Interest
- The interest that is earned upon the re-investment of interest payments. Interest-on-interest is primarily used in the context of coupon paying bonds, where all coupon payments are assumed to be re-invested at some interest rate and held until the bond matures, or when the bond is sold.
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Interest-Only ARM
- An adjustable-rate mortgage (ARM) with an initial interest-only payment period. During the interest-only period, only the calculated interest must be paid; no principal must be repaid. The length of the interest-only period varies with each mortgage type. After the interest-only period, the mortgage must amortize so that the mortgage will be paid off by the end of its original term. This means that monthly payments must increase substantially after the initial interest-only period lapses.
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Interest-Only Mortgage
- A type of mortgage in which the mortgagor is only required to pay off the interest that arises from the principal that is borrowed. Because only the interest is being paid off, the interest payments remain fairly constant throughout the term of the mortgage. However, interest-only mortgages do not last indefinitely, meaning that the mortgagor will need to pay off the principal of the loan eventually.
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Interested Shareholder
- A shareholder or association with beneficial ownership, whether direct or indirect, of enough voting stock to affect company decisions.
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Interim Dividend
- A dividend payment made before a company's AGM and final financial statements. This declared dividend usually accompanies the company's interim financial statements.
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Interim Earnings Per Share
- A measure of earnings calculated at a specified time, shorter than or before the end of year calculations. Interim earnings per share (EPS) can be calculated at any time, given the knowledge of number of outstanding shares and net income less any preferred dividends outstanding just as EPS is calculated at the time of reporting. A typical interim frequency is quarterly, and sometimes monthly.
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Interlisted Stock
- A security that is listed on multiple stock exchanges. An interlisted stock could be a stock that trades on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX).
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Intermarket Analysis
- The analysis of more than one related asset class or financial market to determine the strength or weakness of the financial markets or asset classes being considered. Instead of looking at financial markets or asset classes on an individual basis, this type of analysis looks at several strongly correlated markets or asset classes such as stocks, bonds and commodities.
- The analysis of more than one related asset class or financial market to determine the strength or weakness of the financial markets or asset classes being considered. Instead of looking at financial markets or asset classes on an individual basis, this type of analysis looks at several strongly correlated markets or asset classes such as stocks, bonds and commodities.
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Intermarket Sector Spread
- The yield spread between two fixed-income securities in different sectors with the same maturity.
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Intermarket Spread
- The simultaneous purchase of a given delivery month of a futures contract on one exchange, and the simultaneous sale of the same delivery month of the same futures contract on another exchange in the hope the sale price is greater than the purchase price.
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Intermarket Spread Swap
- A swap transaction meant to capitalize on a yield discrepancy between bond market sectors.
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Intermarket Trading System - ITS
- An electronic computer system that joins the trading floors of all the major equity American exchanges. This system essentially allows all eligible member market-makers and brokers the ability to execute buy and/or sell orders at different exchanges whenever they see that a better price quote available.
The system has connections with large national exchanges, such as the NYSE, as well as smaller regional exchanges, such as the Boston stock exchange.
- An electronic computer system that joins the trading floors of all the major equity American exchanges. This system essentially allows all eligible member market-makers and brokers the ability to execute buy and/or sell orders at different exchanges whenever they see that a better price quote available.
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Intermediate Targets
- Targets set by the Federal Reserve as part of its monetary policy goals. Intermediate targets can be any economic variable that is not directly controlled by the central bank. Although not directly controlled by the central bank, intermediate targets will often quickly adjust to policy changes and behave in a predictable manner relative to the Federal Reserve's economic goals. These targets pertain either to monetary growth or interest rates.
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Intermediate/Medium-Term Debt
- A type of fixed income security with a maturity, or date of principle repayment, that is set to occur in the next 3-10 years. Bonds and other fixed income products tend to be classified by maturity date, as it is the most important variable in the yield calculations. In a standard (or positive) yield curve environment, intermediate-term bonds pay a higher yield for a given credit quality than short-term bonds, but a lower yield compared to long-term (10+ years) bonds.
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Internal Audit
- An audit performed by a person (or persons) employed by the firm being audited.
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Internal Auditor
- An employee of a company charged with providing independent and objective evaluations of the company's financial and operational business activities, including its corporate governance. Internal auditors also provide evaluations of operational efficiencies and will usually report to the highest levels of management on how to improve the overall structure and practices of the company.
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Internal Capital Generation Rate - ICGR
- A quantifiable mathematical rate that portrays how quickly a bank is able to generate equity capital. The Internal Capital Generation Rate (ICGR) is calculated by dividing the bank's retained earnings by the average balance of the combined equity of all stockholders for a given accounting period. The bank's retained earnings are found by subtracting dividends paid from net income.
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Internal Claim
- A claim by a creditor that is restricted to the business's assets and not those of its owners. The liability for the claim arises out of the business itself. As long as the business is legally created and treated as an entity separate from its owners, creditors' claims against the business should not reach the assets of the business owners.
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Internal Controls
- Methods put in place by a company to ensure the integrity of financial and accounting information, meet operational and profitability targets and transmit management policies throughout the organization.
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Internal Growth Rate
- The highest level of growth achievable for a business without obtaining outside financing.
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Internal Rate Of Return - IRR
- The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first.
IRR is sometimes referred to as "economic rate of return (ERR)".
- The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first.
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Internal Revenue Service - IRS
- A United States government agency that is responsible for the collection and enforcement of taxes. The IRS was established in 1862 by President Lincoln and operates under the authority of the United States Department of the Treasury. It is primarily engaged in the collection of individual income taxes and employment taxes, but also handles corporate, gift, excise and estate taxes.
The IRS is sometimes referred to as the "tax man".
- A United States government agency that is responsible for the collection and enforcement of taxes. The IRS was established in 1862 by President Lincoln and operates under the authority of the United States Department of the Treasury. It is primarily engaged in the collection of individual income taxes and employment taxes, but also handles corporate, gift, excise and estate taxes.
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Internalization
- A decision by a brokerage to fill an order with the firm's own inventory of stock.
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International Accounting Standards - IAS
- An older set of standards stating how particular types of transactions and other events should be reflected in financial statements. In the past, international accounting standards (IAS) were issued by the Board of the International Accounting Standards Committee (IASC).
Since 2001, the new set of standards has been known as the international financial reporting standards (IFRS) and has been issued by the International Accounting Standards Board (IASB).
- An older set of standards stating how particular types of transactions and other events should be reflected in financial statements. In the past, international accounting standards (IAS) were issued by the Board of the International Accounting Standards Committee (IASC).
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International Association of Financial Engineers - IAFE
- An organization comprised of scholars and specialists from various areas of financial concern.
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International Bank Account Number - IBAN
- A standard numbering system developed to identify bank accounts from around the world. It was originally developed by banks in Europe to simplify transactions involving bank accounts from other countries.
- A standard numbering system developed to identify bank accounts from around the world. It was originally developed by banks in Europe to simplify transactions involving bank accounts from other countries.
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International Bank Of Reconstruction And Development - IBRD
- A component of the United Nation's World Bank Group that was established in 1945 with the original mandate of providing funding towards the post-World War II rebuilding efforts. In the modern era, the IBRD's main objective is to provide loans and other financial services to less fortunate countries in hopes of reducing global poverty.
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International Banking Act of 1978
- Federal banking legislation that put all domestic bank branches and agencies of foreign banks under the control of U.S. banking regulators. The International Banking Act mandated that foreign bank branches located in the U.S. adhere to the same regulations as U.S. banks.
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International Banking Facility - IBF
- A facility that accepts deposits and offers loans to foreign customers and businesses.
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International Bond
- Bonds that are issued in a country by a non-domestic entity.
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International Clearing System
- A trading system used when a futures contract transaction is entered on an international level. It is designed to promote world trade and market efficiency. Most international clearing transactions are administered by an international clearing house.
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International Commodities Clearing House - ICCH
- An international clearing house for futures markets around the world. Based in London, the ICCH maintains and organizes the daily duties of clearing futures contracts and guarantees the due fulfillment of transactions for its registered members.
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International Competitive Bidding - ICB
- In financing arrangements involving the World Bank, a bidding process that requires the borrower to procure resources funded by its loan according to a number of specified conditions. ICB requires World Bank borrowers to internationally advertise the required goods or services funded by their loans, issue bids for advertisement in an acceptable international language and award contracts to the lowest acceptable bids, subject to certain considerations for qualitative judgment.
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International Currency Converter
- An electronic program that allows for the quick conversion of currencies. An international currency converter can convert the value of one currency to another, such as dollars to euros. Converters will typically use the most recent market prices in the foreign exchange market.
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International Currency Exchange Rate
- The rate at which two currencies in the market can be exchanged. International currency exchange rates display how much of one unit of a currency can be exchanged for another currency. Currency exchange rates can be floating, in which case they change continually based on a multitude of factors. Alternatively, the exchange rates of some foreign currencies are pegged, or fixed, to other currencies, in which case they move in tandem with the currencies to which they are pegged.
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International Currency Markets
- The market in which participants from around the world are able to buy, sell, exchange and speculate on different currencies. International currency markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers and investors.
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International Depository Receipt - IDR
- A negotiable, bank-issued certificate representing ownership of stock securities by an investor outside the country of origin.
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International Equity Style Box
- A visual representation of the principal investment characteristics of foreign stocks and foreign stock funds. The international equity style box is a valuable tool for investors to use to determine the risk-return structures of their international stocks/portfolios and/or how these investments fit into their investing criteria.
Also known as an "international stock style box".
- A visual representation of the principal investment characteristics of foreign stocks and foreign stock funds. The international equity style box is a valuable tool for investors to use to determine the risk-return structures of their international stocks/portfolios and/or how these investments fit into their investing criteria.
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International ETF
- Any exchange-traded fund that invests in foreign-based securities. The focus may be global, regional (such as Latin America, Asia-Pacific, etc.) or on a specific country.
International ETFs are invested passively around an underlying index, but the index may vary substantially from one fund manager to the next. Some funds, especially those with a wide global footprint or those that invest in countries with advanced economies, can provide strong diversification by investing in hundreds of companies.
- Any exchange-traded fund that invests in foreign-based securities. The focus may be global, regional (such as Latin America, Asia-Pacific, etc.) or on a specific country.
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International Financial Reporting Standards - IFRS
- A set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board.
IFRS are sometimes confused with International Accounting Standards (IAS), which are the older standards that IFRS replaced. (IAS were issued from 1973 to 2000.)
- A set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board.
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International Fisher Effect - IFE
- An economic theory that states that an expected change in the current exchange rate between any two currencies is approximately equivalent to the difference between the two countries' nominal interest rates for that time.
Calculated as:
Where:
"E" represents the % change in the exchange rate
"i1" represents country A's interest rate
"i2" represents country B's interest rate
- An economic theory that states that an expected change in the current exchange rate between any two currencies is approximately equivalent to the difference between the two countries' nominal interest rates for that time.
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International Foreign Exchange Master Agreement - IFEMA
- An agreement set forth by the Foreign Exchange Committee that reflects the best practices for transactions in the foreign exchange market. IFEMA was published in 1997 and sponsored by the British Bankers Association, Canadian Foreign Exchange Committee and the Tokyo Foreign Exchange Market Practices Committee.
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International Fund
- A mutual fund that can invest in companies located anywhere outside of its investors' country of residence.
Also referred to as a "foreign fund".
- A mutual fund that can invest in companies located anywhere outside of its investors' country of residence.
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International Institute for Management Development - IMD
- One of the top graduate business schools in the world, located in Lausanne, Switzerland. The International Institute for Management Development (IMD) was formed in 1990 following the merger of two management education centers that were originally created by Alcan and Nestle. IMD is set up to be primarily an executive education center and offers no university courses or affiliations.
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International Monetary Fund - IMF
- An international organization created for the purpose of:
1. Promoting global monetary and exchange stability.
2. Facilitating the expansion and balanced growth of international trade.
3. Assisting in the establishment of a multilateral system of payments for current transactions.
- An international organization created for the purpose of:
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International Monetary Market - IMM
- A division of the Chicago Mercantile Exchange (CME) that deals with the trading of currency and interest rate futures and options. Trading on the IMM started in May 1972 when the CME and the IMM merged.
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International Organization Of Securities Commissions - IOSCO
- A global cooperative of securities regulatory agencies that aims to establish and maintain worldwide standards for efficient, orderly and fair markets. The stated goals of the IOSCO are to:
-Promote high standards of regulation for the sake of orderly and efficient markets
-Share information with exchanges and assist assist them with technical and operational issues
-Establish standards toward monitoring global investment transactions across borders and markets
- A global cooperative of securities regulatory agencies that aims to establish and maintain worldwide standards for efficient, orderly and fair markets. The stated goals of the IOSCO are to:
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International Reserves
- Any kind of reserve funds that can be passed between the central banks of different countries. International reserves are an acceptable form of payment between these banks. The reserves themselves can either be gold or else a specific currency, such as the dollar or euro.
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International Securities Association For Institutional Trade Communication - ISITC
- An organization of financial institutions and technology providers that improves the operational effectiveness of the financial industry. One key initiative the ISTIC is promoting vigorously is the industry-wide use of straight through processing (STP). Currently, many of the financial transactions take several days to complete because of the complexity involved and that it must be done manually. By encouraging and supporting the use of STP, the financial markets can become more resourceful and economical.
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International Securities Exchange - ISE
- An electronic options exchange that was launched in 2000. The exchange provides investors with greater liquidity and the ability to execute transactions at a much faster rate than the open-cry trading floor that has historically been the basis for options trading. In addition to being an options exchange, the ISE is also a publicly traded company.
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International Securities Identification Number - ISIN
- A code that uniquely identifies a specific securities issue. The organization that allocates ISINs in any particular country is the country's respective National Numbering Agency (NNA).
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International Securities Market Association - ISMA
- A self-regulatory organization and trade association originally located in Zürich, Switzerland, that encourages systematic and compliant trading in the international securities market. It also promotes the development of the Euromarkets and is acknowledged as a designated investment exchange by the Financial Services Authority, which regulates the financial services industry in the U.K.
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International Swaps and Derivatives Association - ISDA
- An association created by the private negotiated derivatives market that represents participating parties. This association helps to improve the private negotiated derivatives market by identifying and reducing risks in the market.
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Internet Service Provider - ISP
- A company that furnishes corporations and individual consumers with various services, mainly access to the internet.
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Internote
- Corporate debt securities that are designed to allow ease of purchase by individual investors. Internotes reflect the issued debt of the underlying entity which allows retail investors to gain access to bank, corporate or government bonds. Internotes are usually unsecured and have a minimum investment of $1000.
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Interpolated Yield Curve - I Curve
- A yield curve derived by using on-the-run treasuries. Because on-the-run treasuries are limited to specific maturities, the yield of maturities that lies between the on-the-run treasuries must be interpolated, which can be accomplished by a number of methodologies, including bootstrapping and regressions.
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Interpolation
- A method of estimating an unknown price or yield of a security. This is achieved by using other related known values that are located in sequence with the unknown value.
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Interpositioning
- The unlawful practice of adding an extra broker/dealer as a principal on a trade, even if no service is provided. Typically, interpositioning is done as part of a mutual benefit strategy, sending commissions to the broker/dealer in exchange for referrals or other cash profit. This type of behavior occurs at the upper levels of trade between specialists and broker/dealers, hedge funds or other institutional accounts.
- The unlawful practice of adding an extra broker/dealer as a principal on a trade, even if no service is provided. Typically, interpositioning is done as part of a mutual benefit strategy, sending commissions to the broker/dealer in exchange for referrals or other cash profit. This type of behavior occurs at the upper levels of trade between specialists and broker/dealers, hedge funds or other institutional accounts.
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Interpretive Letter
- A letter issued by banking regulators that interprets the banking law for a specific issue or party. Interpretive letters become effective immediately upon issuance. These letters are similar to IRS letter rulings that interpret the application of tax law. An example is the 1989 ruling that allowed banks to begin underwriting corporate bonds.
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Interstate Banking
- The expansion of banking across state lines. Interstate banking became widespread in the mid 1980s, when state legislatures passed legislation that allowed bank holding companies to acquire out-of-state banks on a reciprocal basis with other states. Interstate banking has led to the rise of both regional and national banking chains.
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Intertemporal Choice
- An economic term describing how an individual's current decisions affect what options become available in the future. Theoretically, by not consuming today, consumption levels could increases significantly in the future, and vice versa.
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Interval Fund (Scheme)
- A fund that combines the features of open-ended and closed-ended schemes, making the fund open for sale or redemption during pre-determined intervals.
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Intestacy
- The act of dying without a legal will.
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Intestate
- The act of dying without a legal will. Determining the distribution of the deceased's assets then becomes the responsibility of a probate court.
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Intraday
- Another way of saying "within the day". Intraday price movements are particularly important to short-term traders looking to make many trades over the course of a single trading session. The term intraday is occasionally used to describe securities that trade on the markets during regular business hours, such as stocks and ETFs, as opposed to mutual funds, which must be bought from a dealer.
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Intraday Intensity Index
- A volume based indicator that depicts the flow of funds for a security according to where it closes in its high and low range. Calculated as:
- A volume based indicator that depicts the flow of funds for a security according to where it closes in its high and low range. Calculated as:
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Intramarket Sector Spread
- The yield spread between two fixed-income securities with the same maturity within the same sector.
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Intrapreneur
- An inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial skills without incurring the risks associated with those activities. Intrapreneurs are usually employees within a company who are assigned a special idea or project, and are instructed to develop the project like an entrepreneur would. Intrapreneurs usually have the resources and capabilities of the firm at their disposal. The intrapreneur's main job is to turn that special idea or project into a profitable venture for the company.
- An inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial skills without incurring the risks associated with those activities. Intrapreneurs are usually employees within a company who are assigned a special idea or project, and are instructed to develop the project like an entrepreneur would. Intrapreneurs usually have the resources and capabilities of the firm at their disposal. The intrapreneur's main job is to turn that special idea or project into a profitable venture for the company.
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Intrastate Offering
- In the United States, a securities offering that can only be purchased in the state in which it is being issued. Because the offering does not include more than one state, it does not fall under the jurisdiction of the Securities and Exchange Commission and therefore does not need to be registered with the SEC. The offering does, however, fall under the jurisdiction of state regulators.
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Intrinsic Value
- 1. The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.
2. For call options, this is the difference between the underlying stock's price and the strike price. For put options, it is the difference between the strike price and the underlying stock's price. In the case of both puts and calls, if the respective difference value is negative, the instrinsic value is given as zero.
- 1. The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.
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Introducing Broker - IB
- A futures broker who has a direct relationship with a client, but delegates the work of the floor operation and trade execution to another futures merchant. The merchant firm is usually a close partner of the IB.
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Inventory
- The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners.
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Inventory Accounting
- The body of accounting that deals with valuing and accounting for changes in inventoried assets. Changes in value can occur for a number of reasons including depreciation, deterioration, obsolescence, change in customer taste, increased demand, decreased market supply and so on.
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Inventory Reserve
- An accounting entry that represents a deduction from earnings for the purpose of fairly and reasonably representing the value of inventoried assets on a balance sheet. The inventory reserve is used to make up for the fact that all inventory will not be sold at the cost to the firm.
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Inventory Turnover
- A ratio showing how many times a company's inventory is sold and replaced over a period. the
The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or "inventory turnover days".
- A ratio showing how many times a company's inventory is sold and replaced over a period. the
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Inverse ETF
- An exchange-traded fund (ETF) that is constructed by using various derivatives for the purpose of profiting from a decline in the value of an underlying benchmark. Investing in these ETFs is similar to holding various short positions, or using a combination of advanced investment strategies to profit from falling prices.
Also known as a "Short ETF," or "Bear ETF".
- An exchange-traded fund (ETF) that is constructed by using various derivatives for the purpose of profiting from a decline in the value of an underlying benchmark. Investing in these ETFs is similar to holding various short positions, or using a combination of advanced investment strategies to profit from falling prices.
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Inverse Floater
- A bond or other type of debt whose coupon rate has an inverse relationship to short-term interest rates.
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Inverse Head And Shoulders
- A chart pattern used in technical analysis to predict the reversal of a current downtrend. This pattern is identified when the price action of a security meets the following characteristics:
1. The price falls to a trough and then rises.
2. The price falls below the former trough and then rises again.
3. Finally, the price falls again, but not as far as the second trough.
Once the final trough is made, the price heads upward toward the resistance found near the top of the previous troughs. Investors typically enter into a long position when the price rises above the resistance of the neckline. The first and third trough are considered shoulders, and the second peak forms the head.
This pattern is also known as a "reverse head and shoulders" or a "head and shoulders bottom".
- A chart pattern used in technical analysis to predict the reversal of a current downtrend. This pattern is identified when the price action of a security meets the following characteristics:
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Inverse Saucer
- A technical chart formation that indicates the stock's price has reached its high and that the upward trend has come to an end. An inverse saucer is characterized by a steady flattening of the uptrend to such a degree that the market at one moment enters a sideways range, but then slowly starts to fall slowly and finally accelerates downward. This rare formation provides no clear price target but usually implies quite a lot of potential since 50% or more retracement of the preceding uptrend can be expected. Also known as "rounded top".
- A technical chart formation that indicates the stock's price has reached its high and that the upward trend has come to an end. An inverse saucer is characterized by a steady flattening of the uptrend to such a degree that the market at one moment enters a sideways range, but then slowly starts to fall slowly and finally accelerates downward. This rare formation provides no clear price target but usually implies quite a lot of potential since 50% or more retracement of the preceding uptrend can be expected. Also known as "rounded top".
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Inverted Market
- In the context of options and futures, this is when the current (or short-term) contract prices are higher than the long-term contracts.
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Inverted Spread
- A situation in which the yield difference between a longer term financial instrument and a shorter term instrument is negative. This is calculated by subtracting the longer term by the shorter term. In effect, the shorter term instrument is yielding a higher rate of return than the longer term instrument. This is in contrast to what is considered a normal market, where longer term instruments should yield higher returns to compensate for time.
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Inverted Yield Curve
- An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.
Partial inversion occurs when only some of the short-term Treasuries (five or 10 years) have higher yields than the 30-year Treasuries do. An inverted yield curve is sometimes referred to as a "negative yield curve".
- An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.
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Invest, Then Investigate
- An investment strategy where investors immediately purchase a stock and then do research and due diligence afterwards.
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Investability Quotient - IQ
- A term used by Standard and Poor's to describe how good a company's medium to long-term return potential is. While medium to long-term return potential is the major contributor to IQ, other factors are also considered. The scale ranges from a minimum of 0 to a maximum of 250.
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Investing
- The act of committing money or capital to an endeavor (a business, project, real estate, etc.) with the expectation of obtaining an additional income or profit. Investing also can include the amount of time you put into the study of a prospective company, especially since time is money.
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Investing Sage
- An investor who is extremely knowledgeable about the markets and has a reputation of making successful investments. These investors are widely known to the investing public for generating double-digit returns.
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Investment
- An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
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Investment Advisor
- As defined by the Investment Advisors Act of 1940, any person or group that makes investment recommendations or conducts securities analysis in return for a fee, whether through direct management of client assets or via written publications.
An investment advisor who has sufficient assets to be registered with the SEC is known as a Registered Investment Advisor, or RIA. Investment advisors are prohibited from disseminating advice known to be deceitful or fraudulent, and from acting as a principal on their own accounts by buying and selling securities between themselves and a client without prior written consent.
May also be referred to as a "financial advisor".
- As defined by the Investment Advisors Act of 1940, any person or group that makes investment recommendations or conducts securities analysis in return for a fee, whether through direct management of client assets or via written publications.
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Investment Advisors Act of 1940
- The federal law enforced and interpreted by the Securities and Exchange Commission (SEC) that governs investment advisors.
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Investment Advisory Representative - IAR
- Personnel that work for investment advisory companies whose main responsibility is to provide investment related advice. According to regulations, IARs can only provide advice on topics on which they have passed the appropriate examinations.
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Investment Bank - IB
- A financial intermediary that performs a variety of services. This includes underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients.
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Investment Banker
- A person representing a financial institution that is in the business of raising capital for corporations and municipalities.
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Investment Banking
- A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations. Investment banks also provide guidance to issuers regarding the issue and placement of stock.
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Investment Climate
- The general economic conditions affecting the financial markets.
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Investment Club
- A group of people who pool their money to make investments. Usually, investment clubs are organized as partnerships and after the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings may be educational and each member may actively participate in investment decisions.
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Investment Company
- A corporation or trust engaged in the business of investing the pooled capital of investors in financial securities. This is most often done either through a closed-end fund or an open-end fund (also referred to as a mutual fund). In the U.S., most investment companies are registered with and regulated by the Securities & Exchange Commission under the Investment Company Act of 1940.
Also known as "fund company" or "fund sponsor".
- A corporation or trust engaged in the business of investing the pooled capital of investors in financial securities. This is most often done either through a closed-end fund or an open-end fund (also referred to as a mutual fund). In the U.S., most investment companies are registered with and regulated by the Securities & Exchange Commission under the Investment Company Act of 1940.
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Investment Company Act Of 1940
- Created in 1940 through an act of Congress, this piece of legislation clearly defines the responsibilities and limitations placed on fund companies that offer investment products to the public.
- Created in 1940 through an act of Congress, this piece of legislation clearly defines the responsibilities and limitations placed on fund companies that offer investment products to the public.
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Investment Company Institute - ICI
- Founded in 1940, the Investment Company Institute, based in Washington, D.C., is the national trade association of U.S. investment companies, which includes mutual funds, closed-end funds, exchange-traded funds and unit investment trusts.
- Founded in 1940, the Investment Company Institute, based in Washington, D.C., is the national trade association of U.S. investment companies, which includes mutual funds, closed-end funds, exchange-traded funds and unit investment trusts.
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Investment Consultant
- An advisor who helps investors with their long-term investment planning. An investment consultant, unlike a broker, does more in-depth work on formulating clients' investment strategies, helping them fulfill their needs and goals.
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Investment Farm
- A farm owned solely for investment purposes.
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Investment Grade
- A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such as Standard & Poor's, use different designations consisting of upper- and lower-case letters 'A' and 'B' to identify a bond's credit quality rating. 'AAA' and 'AA' (high credit quality) and 'A' and 'BBB' (medium credit quality) are considered investment grade. Credit ratings for bonds below these designations ('BB', 'B', 'CCC', etc.) are considered low credit quality, and are commonly referred to as "junk bonds".
- A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such as Standard & Poor's, use different designations consisting of upper- and lower-case letters 'A' and 'B' to identify a bond's credit quality rating. 'AAA' and 'AA' (high credit quality) and 'A' and 'BBB' (medium credit quality) are considered investment grade. Credit ratings for bonds below these designations ('BB', 'B', 'CCC', etc.) are considered low credit quality, and are commonly referred to as "junk bonds".
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Investment Horizon
- The total length of time that an investor expects to hold a security or portfolio. The investment horizon is used to determine the investor's income needs and desired risk exposure, which is then used to aid in security selection.
- The total length of time that an investor expects to hold a security or portfolio. The investment horizon is used to determine the investor's income needs and desired risk exposure, which is then used to aid in security selection.
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Investment Ideas
- Specific views, plans or ideas on ways to invest money effectively. Investment ideas typically involve the expertise and advice of an investment advisor who recommends different investment tools based on individual circumstances.
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Investment Income
- Income coming from interest payments, dividends, capital gains collected upon the sale of a security or other assets, and any other profit that is made through an investment vehicle of any kind.
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Investment Industry Regulatory Organization of Canada - IIROC
- The governing authority for all debt and equity markets, investments and investment brokers, dealers and providers in Canada. The Investment Industry Regulatory Organization of Canada (IIROC) is a self-regulatory organization, similar to the Financial Industry Regulatory Authority (FINRA) in the U.S. Its objective is to maintain fair and orderly markets and regulate all securities-related commerce within the country.
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Investment Objective
- A client information form used by registered investment advisors and other asset managers that aids in determining the optimal portfolio mix for the client. An investment objective survey may come in the form of a questionnaire, where the investor will be asked things such as:
-Current liquid and net worth
-Risk aversion
-Investing time horizon
-Income levels
-Expense levels
-Planned bequeathments and/or charitable contributions
-Restrictions on security selection
- A client information form used by registered investment advisors and other asset managers that aids in determining the optimal portfolio mix for the client. An investment objective survey may come in the form of a questionnaire, where the investor will be asked things such as:
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Investment Policy Statement - IPS
- A document drafted between a portfolio manager and a client that outlines general rules for the manager.
This statement provides the general investment goals and objectives of a client and describes the strategies that the manager should employ to meet these objectives. Specific information on matters such as asset allocation, risk tolerance, and liquidity requirements would also be included in an IPS.
- A document drafted between a portfolio manager and a client that outlines general rules for the manager.
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Investment Pyramid
- A portfolio strategy that allocates assets according to the relative safety and soundness of investments. The bottom of the pyramid is comprised of low-risk investments, the mid-portion is composed of growth investments and the top is speculative investments.
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Investment Real Estate
- Real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while the others are used to generate rental income and profits through price appreciation. The tax implications for investment real estate are often different than those for residential real estate.
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Investment Securities
- Securities that are purchased in order to be held for investment. This is in contrast to securities that are purchased by a broker-dealer or other intermediary for resale. Banks often purchase marketable securities to hold in their portfolios.
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Investment Strategy
- An investor's plan of attack to guide their investment decisions based on individual goals, risk tolerance and future needs for capital. The components of most investment strategies include asset allocation, buy and sell guidelines, and risk guidelines.
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Investment Style
- The overarching strategy or theory used by either a retail investor or an institutional money manager to set asset allocation and choose individual securities for investment. The investment style of a fund helps set expectations for long-term performance potential and aids in advertising the fund to investors looking for a specific type of market exposure.
- The overarching strategy or theory used by either a retail investor or an institutional money manager to set asset allocation and choose individual securities for investment. The investment style of a fund helps set expectations for long-term performance potential and aids in advertising the fund to investors looking for a specific type of market exposure.
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Investment Style
- In the context of stock mutual fund investing, refers to using one of three possible approaches -- investing in value stocks, growth stocks, or a blend of value and growth stocks - to create a fund portfolio.
- In the context of stock mutual fund investing, refers to using one of three possible approaches -- investing in value stocks, growth stocks, or a blend of value and growth stocks - to create a fund portfolio.
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Investment Vehicle
- In general, any method by which to invest.
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Investor Relations - IR
- A department, present in most medium to large public companies, that provides investors with an accurate account of the company's affairs. This helps investors to make informed buy or sell decisions.
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Investor Shares
- Mutual fund shares purchased by individual investors as opposed to institutional shareholders. In general, the amount invested in the fund is what distinguishes investors from institutional shareholders. In many cases, a fund will have a minimum investment that must be made to qualify as an institutional shareholder.
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Invisible Hand
- A term coined by economist Adam Smith in his 1776 book "An Inquiry into the Nature and Causes of the Wealth of Nations". In his book he states:
"Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it ... He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good."
Thus, the invisible hand is essentially a natural phenomenon that guides free markets and capitalism through competition for scarce resources.
- A term coined by economist Adam Smith in his 1776 book "An Inquiry into the Nature and Causes of the Wealth of Nations". In his book he states:
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Invisible Hard Market
- A property/casualty insurance market phenomenon in which the market is hardening (seeing reduced supply and higher prices) but the normally positive effects of a hard market are not visible to insurers. Under ordinary circumstances, a hard market is considered a good thing for insurers because it increases underwriting income. In the invisible hard market, insurers are not seeing this increase and thus not seeing a better bottom line.
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Invisible Supply
- Physical stocks of a commodity that are available for delivery upon futures contracts, but whose quantities cannot be accurately identified.
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Invoice
- A commercial document that itemizes a transaction between a buyer and a seller. An invoice will usually include the quantity of purchase, price of goods and/or services, date, parties involved, unique invoice number, and tax information. If goods or services were purchased on credit, the invoice will usually specify the terms of the deal, and provide information on the available methods of payment.
Also known as a "bill", "statement" or "sales invoice".
- A commercial document that itemizes a transaction between a buyer and a seller. An invoice will usually include the quantity of purchase, price of goods and/or services, date, parties involved, unique invoice number, and tax information. If goods or services were purchased on credit, the invoice will usually specify the terms of the deal, and provide information on the available methods of payment.
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Involuntary Cash-Out
- Distributing the balance of a participant's retirement account under a qualified plan without the written consent of the participant, the participant's spouse or beneficiary.
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Involuntary Conversion
- A process where a taxpayer is involuntarily forced to dispose of property that has been stolen, condemned, destroyed or repossessed, and another piece of property or cash is received in lieu of the property. Involuntary conversion can result in a possible gain or loss to the taxpayer, as long as the property was not the taxpayer's main home.
No loss can be deducted if the involuntary conversion is a result of casualty or theft.
- A process where a taxpayer is involuntarily forced to dispose of property that has been stolen, condemned, destroyed or repossessed, and another piece of property or cash is received in lieu of the property. Involuntary conversion can result in a possible gain or loss to the taxpayer, as long as the property was not the taxpayer's main home.
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Inward Arbitrage
- A form of arbitrage involving rearranging a bank's cash by borrowing from the interbank market, and re-depositing the borrowed money locally at a higher interest rate. The bank will make money on the spread between the interest rate on the local currency, and the interest rate on the borrowed currency.
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IOU
- An abbreviation of the phrase "I owe you."
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IPO ETF
- An exchange-traded fund that focuses on stocks that have recently held an initial public offering (IPO). The underlying indexes tracked by IPO ETFs vary from one fund manager to another, but index IPO ETFs are usually passively managed and contain equities that have recently been offered to the public. By investing in an IPO ETF, investors hope to gain exposure to IPOs during their initial introduction to the market, while diversifying their investment across a pool of IPOs from varying sectors and industries.
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IPO Lock-Up
- A contractual caveat referring to a period of time after a company has initially gone public, usually between 90 to 180 days. During these initial days of trading, company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. Once the lock-up period ends, most trading restrictions are removed.
Also referred to as "lock-up period".
- A contractual caveat referring to a period of time after a company has initially gone public, usually between 90 to 180 days. During these initial days of trading, company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. Once the lock-up period ends, most trading restrictions are removed.
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IQD
- The currency abbreviation or currency symbol for the Iraqi Dinar (IQD), the currency of Iraq. The dinar is made up of 1,000 fils and is often presented with the symbol (__). The dinar replaced the Indian rupee as the country's national currency, which is issued by the Central Bank of Iraq.
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IQD (Iraqi Dinar)
- The currency abbreviation or currency symbol for the Iraqi dinar (IQD), the currency of Iraq. The Iraqi dinar is made up of 1,000 fils. The dinar replaced the Indian rupee as the country's national currency, and is issued by the Central Bank of Iraq.
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IRA Adoption Agreement And Plan Document
- A contract between an IRA holder and the financial institution that explains the provisions of the holder's IRA plan.
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IRA Plan
- A plan that individuals may establish to arrange and plan for retirement. Generally, an IRA plan allows you to save money and defer taxes until you retire. IRA plans have annual contribution limits that are established by the government and rise gradually with inflation; individuals age 50 and older can make slightly higher "catch-up" contributions.
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IRA Rollover
- A transfer of funds from a retirement account into a Traditional IRA or a Roth IRA. This can occur either through a direct transfer, or by a check, which the custodian of the distributing account writes to the account holder who then deposits it into another IRA account.
- A transfer of funds from a retirement account into a Traditional IRA or a Roth IRA. This can occur either through a direct transfer, or by a check, which the custodian of the distributing account writes to the account holder who then deposits it into another IRA account.
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Iridium
- A corrosive resistant element that is sometimes used to harden platinum.
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Iron Butterfly
- An options strategy that is created with four options at three consecutively higher strike prices. The two options located at the middle strike create a long or short straddle (one call and one put with the same strike price and expiration date) depending on whether the options are being bought or sold. The "wings" (options at the higher and lower strike prices) of the strategy are created by the purchase or sale of a strangle (one call and one put at different strike prices but the same expiration date). This strategy differs from the butterfly spread because it uses both calls and puts, as opposed to all calls or all puts.
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Iron Condor
- An advanced options strategy that involves buying and holding four different options with different strike prices. The iron condor is constructed by holding a long and short position in two different strangle strategies. A strangle is created by buying or selling a call option and a put option with different strike prices, but the same expiration date. The potential for profit or loss is limited in this strategy because an offsetting strangle is positioned around the two options that make up the strangle at the middle strike prices.
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IRR
- The currency abbreviation or currency symbol for the Iranian Rial is U+FDFC, the currency for Iran. The rial is made up of 100 dinar but actually has no official symbol. U+FDFC is the standard keyboard position denoting the currency, which is also quoted in a superunit of 10 known as the toman.
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IRR (Iranian Rial)
- The currency abbreviation or currency symbol for the Iranian rial (IRR), the currency for Iran. The rial is made up of 100 dinar, and actually has no official symbol. The keyboard position U+FDFC denotes the currency when using the Unicode Standard. The rial is also quoted in a superunit of 10 known as the toman.
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Irrational Exuberance
- An infamous phrase uttered by Alan Greenspan in 1996 to describe the overvalued market at the time.
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Irredeemable Convertible Unsecured Loan Stock - ICULS
- A a type of security that can be used to purchase underlying common shares. It is similar to a warrant except that it is subject to the conversion ratio. In essence, an ICULS provides the benefits of a bond until it is converted to an equity.
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Irrelevant Cost
- A managerial accounting term that represents a cost, either positive or negative, that does not relate to a situation requiring management's decision.
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Irrevocable Beneficiary
- A beneficiary in a life insurance policy or segregated fund contract whose compensation cannot be changed without his or her consent.
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Irrevocable Letter Of Credit - ILOC
- A letter of credit that can't be canceled. This guarantees that a buyer's payment to a seller will be received on time and for the correct amount.
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Irrevocable Trust
- A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets into the trust, effectively removes all of his or her rights of ownership to the assets and the trust.
This is the opposite of a "revocable trust", which allows the grantor to modify the trust.
- A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets into the trust, effectively removes all of his or her rights of ownership to the assets and the trust.
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IRS Form 4868
- An IRS form that must be submitted by individuals who wish to extend the amount of time they have to file their tax returns. IRS Form 4868 should be completed with the individual or married couple’s name(s), address, Social Security number(s), estimate of total tax liability for the year, total payments already made, remaining amount due (if any) and amount being paid (if any).
Also known as the Application of Automatic Extension of Time to File U.S. Individual Tax Return.
- An IRS form that must be submitted by individuals who wish to extend the amount of time they have to file their tax returns. IRS Form 4868 should be completed with the individual or married couple’s name(s), address, Social Security number(s), estimate of total tax liability for the year, total payments already made, remaining amount due (if any) and amount being paid (if any).
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ISEE Sentiment Indicator
- A measure of investor sentiment in the market measured by looking at the number of opening long call options to opening long put options purchased on the International Stock Exchange. The measure only considers the purchases of customers and does not include the purchases made by market makers, as customers are thought to be the best measures of sentiment.
- A measure of investor sentiment in the market measured by looking at the number of opening long call options to opening long put options purchased on the International Stock Exchange. The measure only considers the purchases of customers and does not include the purchases made by market makers, as customers are thought to be the best measures of sentiment.
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iShares
- Index funds that trade like stocks on stock markets. Each share represents a proportion of ownership in each stock that makes up an index.
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ISK
- The currency abbreviation or the currency symbol for the Iceland Krona (ISK), the currency of Iceland. The krona is divided into 100 aurar and is often presented with the symbol kr. This currency has earned the nickname "Icelandic Crown" in the financial markets because of the word krona's relation to the latin word corona, meaning crown.
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ISK (Icelandic Kr?na)
- The currency abbreviation or the currency symbol for the Iceland króna (ISK), the currency of Iceland. The króna is divided into 100 aurar and is often presented with the symbol kr. This currency has earned the nickname "Icelandic crown" in the financial markets because the english translation is "crown", and because of króna's relation to the latin word corona, meaning crown.
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Islamic Banking
- A banking system that is based on the principles of Islamic law (also known Shariah) and guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest. Collecting interest is not permitted under Islamic law.
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Islamic Financial Services Board - IFSB
- An international organization that issues guiding principles and standards within the banking, insurance and capital market sectors in order to promote stability in the Islamic financial services industry.
The ISFB consists of:- The general assembly, which includes all members of the ISFB
- The council, which acts as the policy making body of the IFSB and includes the senior executive of each full member of the organization
- The technical committee, which advises the council on issues and consists of up to 15 persons appointed by the council
- The working group, which drafts standards and guidelines and reports to the technical committee
- The secretariat, which acts as the permanent administrative body and is headed by a secretary-general appointed by the council
- An international organization that issues guiding principles and standards within the banking, insurance and capital market sectors in order to promote stability in the Islamic financial services industry.
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Island Reversal
- An occurrence in technical analysis where a stock price will gap up/down, trade higher than this price, and then gap down/up below the initial price.
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ISLM Model
- A macroeconomic model that graphically represents two intersecting curves, called the IS and LM curves. The investment/saving (IS) curve is a variation of the income-expenditure model incorporating market interest rates (demand for this model), while the liquidity preference/money supply equilibrium (LM) curve represents the amount of money available for investing (supply for this model).
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ISO Currency Code
- The internationally standardized three-letter abbreviation for a country's currency.
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Isoquant Curve
- A graph of all possible combinations of inputs that result in the production of a given level of output. Used in the study of microeconomics to measure the influence of inputs on the level of production or output that can be achieved.
- A graph of all possible combinations of inputs that result in the production of a given level of output. Used in the study of microeconomics to measure the influence of inputs on the level of production or output that can be achieved.
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Issue
- 1. The process of offering securities as an attempt to raise funds. Companies may issue bonds or shares to investors as a method of financing the business.
2. A series of stocks or bonds that have been offered to the public. A bond or stock issue relates to the set of instruments that were released under one offering.
- 1. The process of offering securities as an attempt to raise funds. Companies may issue bonds or shares to investors as a method of financing the business.
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Issued Shares
- The number of authorized shares that is sold to and held by the shareholders of a company, regardless of whether they are insiders, institutional investors or the general public.
Also known as "issued stock".
- The number of authorized shares that is sold to and held by the shareholders of a company, regardless of whether they are insiders, institutional investors or the general public.
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Issuer
- A legal entity that develops, registers and sells securities for the purpose of financing its operations. Issuers may be domestic or foreign governments, corporations or investment trusts. Issuers are legally responsible for the obligations of the issue and for reporting financial conditions, material developments and any other operational activities as required by the regulations of their jurisdictions. The most common types of securities issued are common and preferred stocks, bonds, notes, debentures, bills and derivatives.
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Itayose
- A clearing method used by Japanese commodity exchanges to set prices. It is a form of auction market in which the time of order entry is not distinguished, and an opening price is derived on the principle of price priority requiring that the following occurs:
1. All market orders are executed first.
2. Next, all limit orders are executed to sell/buy at prices lower/higher than the execution price.
3. Finally, the following amounts of limit orders to sell or buy are at the execution price:
- the entire amount of all either sell or buy orders, and
- at least one trading unit from the opposite side of the order book.
- A clearing method used by Japanese commodity exchanges to set prices. It is a form of auction market in which the time of order entry is not distinguished, and an opening price is derived on the principle of price priority requiring that the following occurs:
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Itemized Deduction
- A deduction from a taxpayer's taxable adjusted gross income that is made up of deductions for money spent on certain goods and services throughout the year. The specific deductions that are allowed are outlined by the Internal Revenue Service and include such expenses as mortgage interest, state and local taxes, gifts, and medical expenses.
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Itemized Statement
- A periodic statement issued by a financial institution, such as a bank or brokerage firm, to its customers detailing all account activity for the period. Itemized statements include deposits, credits, debts, fees and all other pertinent activity. Usually, this information is presented in chronological order, although it may be broken down in several different ways for the customer's convenience.
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iTraxx
- A group of international credit derivative indexes that are monitored by the International Index Company (IIC). The credit derivatives market that iTraxx provides allows parties to transfer the risk and return of underlying assets from one party to another without actually transferring the assets. iTraxx indexes cover credit derivatives markets in Europe, Asia and Australia.
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iTraxx LevX Indexes
- A set of two tradable indexes that hold credit default swaps (CDSs) representing a diversified basket of 35 European companies that have liquid debt offerings in the secondary market. The iTraxx LevX Senior Index represents only senior loans, while the iTraxx LevX Subordinated Index represents second- and third-lien loans.
The index offers two pricing sets each day: a mid-day price and end-of-day price. Prices are maintained by a consortium of investment banks, including Morgan Stanley, Barclays Capital, and Lehman Brothers. Both indexes begin with an initial coupon rate, then trade up or down to reflect market activity. New LevX indexes are released periodically to reflect new debt offerings or new company participation in the leveraged loan markets.
- A set of two tradable indexes that hold credit default swaps (CDSs) representing a diversified basket of 35 European companies that have liquid debt offerings in the secondary market. The iTraxx LevX Senior Index represents only senior loans, while the iTraxx LevX Subordinated Index represents second- and third-lien loans.
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