Financial definitions for business owners I

• Definition Inter vivos trust Explain A trust created between living persons. Antithesis of a testamentary trust
• Definition Interpositioning Explain in a securities transaction, which is considered illegal it is if used to generate additional commission
• Definition Investment philosophy Explain investment practiced by an investor. Certain investors favor small-capitalization stocks, while others prefer large blue-chip stocks, for
• Definition Investments Explain As a discipline, the study of financial securities, such as stocks and bonds, from the investor's viewpoint
• Definition Investment software Explain Computer software that helps investors make investment decisions by identifying situations that meet programmed parameters
• Definition Investment strategy Explain investor uses when deciding how to allocate capital among several options including stocks, bonds, cash equivalents, commodities, and real
• Definition Investment strategy committee Explain A committee within a brokerage firm that conducts research and makes recommendations on the firm's stated investment strategy
• Definition Investment Tax Credit Explain Proportion of new capital investment that could be used to reduce a company's tax bill (abolished in 1986
• Definition Investment trust Explain Investment Company Act of 1940. These funds have a fixed number of shares that are traded on the secondary markets, like corporate stock
• Definition Investor Explain The owner of a financial asset
• Definition Investor fallout Explain occurs when the originator commits loan terms to the borrowers and gets commitments from investors at the time of application, or if both
• Definition Investor relations Explain The process by which the corporation communicates with its investors
• Definition Investor's equity Explain The balance of a margin account. Related: Buying on margin, initial margin requirement
• Definition Investors service bureau Explain NYSE service that deals with all general inquiries concerning securities investments
• Definition Invoice Explain Bill written by a seller of goods or services and submitted to a purchaser for payment
• Definition Invoice billing Explain Billing system in which invoices are sent off at the time of customer orders and are all separate bills to be paid
• Definition Invoice date Explain Usually the date when goods are shipped. Payment dates are set relative to the invoice date
• Definition Invoice price Explain The price that the buyer of a futures contract must pay the seller when a Treasury bond is delivered
• Definition Involuntary liquidation preference Explain A premium that must be paid to preferred or preference stockholders if the issuer of the stock is forced into involuntary liquidation
• Definition IRA/Keogh accounts Explain taxes deferred until money is withdrawn. These plans are subject to frequent changes in law with respect to the deductibility of
• Definition Irredeemable bond Explain A bond lacking a call feature or a right of redemption. Also refers to a perpetual bond
• Definition Irrational call option Explain Irrational because the call is sometimes not exercised when it is in the money (interest rates are below the threshold to refinance), and
• Definition Irrelevance result Explain The Modigliani and Miller theorem that a firm's capital structure is irrelevant to the firm's value
• Definition Issue Explain A particular financial asset
• Definition Issued share capital Explain Total amount of shares that have been issued. Related: Outstanding shares
• Definition Issuer Explain An entity that puts a financial asset in the marketplace
• Definition Italian Stock Exchange (ISE) Explain came into effect after the unification of Italy's ten national exchanges in 1991. All listed securities are traded electronically. The
• Definition Itemized deduction Explain Specific deductions allowed by the IRS outlined in the tax return
• Definition International Petroleum Exchange (IPE) Explain Energy futures and options exchange based in London
• Definition and the Republic of Ireland (ISE)\. K\. International Stock Exchange of the U Explain Organization that replaced the London stock exchange after its merger with the International Securities Regulatory Organization (ISRO
• Definition Interpolation Explain A method of approximating a price or yield that is unknown by using numbers that are known
• Definition Intracommodity spread Explain to refer to a trader holding, buying, and selling contracts in the same commodity on the same exchange, but for different months
• Definition Intraday Explain Term meaning within the day, often to refer to the high and the low price of a stock
• Definition Intramarket sector spread Explain same maturity within a market sector. For instance, the difference in interest rates offered for five-year industrial corporate bonds and
• Definition Intrastate offering Explain A securities offering limited to just one state in the United States
• Definition Intrinsic value of an option Explain The amount by which an option is in the money. An option that is not in the money has no intrinsic value
• Definition Intrinsic value of a firm Explain The present value of a firm's expected future net cash flows discounted by the required rate of return
• Definition Inventory financing Explain general finance to refer to loans to consumer product producers that use inventory as collateral. See also: Inventory loan
• Definition Inventory loan Explain inventory. The three basic forms are a blanket inventory lien, a trust receipt, and field warehousing financing
• Definition Inventory turnover Explain inventory, which measures the speed at which inventory is produced and sold. Low turnover is an unhealthy sign, indicating excess stocks
• Definition Inverse floater Explain A derivative instrument whose coupon rate is linked to the market rate of interest in an inverse relationship
• Definition Inverse floating-rate note Explain A variable-rate security whose coupon rate increases as a benchmark interest rate declines
• Definition Inverted market Explain A futures market in which the nearer months are selling at price premiums to the more-distant months. Related: Premium
• Definition Inverted scale Explain A serial bond offering whose bonds with earlier maturity dates have higher yields than bonds with later maturity dates
• Definition Inverted yield curve Explain When short-term interest rates are higher than long-term rates. Antithesis of positive yield curve
• Definition Investment Explain The creation of more money through the use of capital
• Definition Investment Advisers Act Explain financial advisers to register with the Securities and Exchange Commission. The measure was enacted to protect the public from fraud or
• Definition Investment advisory service Explain providing investment advice for a fee. All advisers of an advisory service must be registered with the Securities and Exchange Commission
• Definition Investment analysts Explain Related: Financial analysts
• Definition Investment certificate Explain A document that serves as proof that an individual has an investment in a savings and loan association
• Definition Investment climate Explain Factors such as economic, monetary, and other conditions that affect the performance of investments
• Definition Investment club Explain A group of people who combine their money into a larger pool, then invest collectively in stocks and bonds, making decisions as a group
• Definition Investment company Explain investors in securities appropriate for their stated investment objectives in return for a management fee. See also: Mutual fund
• Definition Investment Company Act of 1940 Explain Legislation that requires investment companies to register with the SEC and that outlines standards by which they must operate
• Definition Investment decisions Explain Decisions concerning the asset side of a firm's balance sheet, such as the decision to offer a new product
• Definition Investment-grade bonds Explain top four categories by commercial credit rating companies. S;P classifies investment-grade bonds as BBB or higher, and Moody's
• Definition Investment history Explain The history of a member firm that establishes certain norms in respect of its investment practice
• Definition Investment income Explain The revenue from a portfolio of invested assets
• Definition Investment letter Explain of new securities and the buyer, in the private placement of these new securities. The letter of intent establishes that the securities are
• Definition Investment management Explain The process of managing money. Also called portfolio management and money management
• Definition Investment manager Explain The individual who manages a portfolio of investments. Also called a portfolio manager or a money manager
• Definition Investment objective Explain Whether the investor requires income or capital appreciation, for example. The investor's objective governs the investment strategy
• Definition Interest rate risk Explain will change due to a change in interest rates. For example, a bond's price drops as interest rates rise. For a depository institution
• Definition Interest rate swap Explain counterparties to exchange periodic interest payments on some predetermined dollar principal, which is called the notional principal amount
• Definition Interest-sensitive insurance policy Explain whose insurance dividend rates vary with respect to inflation, enabling the policyholder to avoid the loss of purchasing power associated
• Definition Interest-sensitive stock Explain Stocks whose earnings are dependent upon and change with the interest rate, e.g., bank stocks
• Definition Interest subsidy Explain the interest payments on its debt from its earnings before calculation of its tax bill under current tax law
• Definition Interest tax shield Explain The reduction in income taxes that results from the tax-deductibility of interest payments
• Definition Interim dividend Explain The declaration and payment of a dividend prior to annual earnings determination
• Definition Interim financing Explain A short-term loan made to a company on the condition that a takeout will follow with long-term or intermediate financing
• Definition Interim statement Explain A financial statement that reflects only a limited period of a company's financial statement, not the entire fiscal year
• Definition Interlocking directorate Explain Describes cross-memberships of directors on each other's company Board of Directors
• Definition Intermarket sector spread Explain The spread between the interest rate offered in two sectors of the bond market for issues of the same maturity
• Definition Intermarket spread swaps Explain An exchange of one bond for another based on the manager's projection of a realignment of spreads between sectors of the bond market
• Definition Intermarket Surveillance Information System (ISIS) Explain A database that distributes information from all the major stock exchanges in the United States
• Definition Inside market Explain Refers to over-the-counter trading. Best (highest) bid and best (lowest) offer, often used in the O.T.C. Market. See: In-line
• Definition Intermediate-term Explain Typically one-ten years
• Definition Intermediation Explain Investment through a financial institution. Related: Disintermediation
• Definition Internal auditor Explain the company's accounting records to that the company is following and complying with all regulations
• Definition Internal expansion Explain Growth of assets resulting from internal financing or internally generated cash flow
• Definition Internal finance Explain Finance generated within a firm by retained earnings and depreciation
• Definition Internal growth rate Explain Maximum rate a firm can expand without outside sources of funding. Growth generated by cash flows retained by company
• Definition Internal market Explain securities within a nation, including its domestic market and foreign market. Compare: External market
• Definition Internal measure Explain The number of days that a firm can finance operations without additional cash income
• Definition Internal Revenue Code Explain The various statutes and regulatilons making up federal tax law
• Definition Internal Revenue Service (IRS) Explain collection of federal taxes, including personal and corporate income taxes, Social Security taxes, and excise and gift taxes
• Definition Internal Revenue Service Restructuring and Reform Act of 1998 Explain particularly related to the time period required for capital gains and taxpayer protection and rights
• Definition Indicated yield Explain quarterly rate times four. To determine the yield, divide the annual dividend by the price of the stock. The resulting number is
• Definition International arbitrage Explain foreign securities and A.D.R.s to capture the profit potential created by time, currency, and settlement inconsistencies that vary across
• Definition International bonds Explain A collective term that refers to global bonds, Eurobonds, and foreign bonds
• Definition International diversification Explain in more than one nation. By diversifying across nations whose economic cycles are not perfectly correlated, investors can typically reduce
• Definition International finance subsidiary Explain usually in Delaware, whose sole purpose once was to issue debentures overseas and invest the proceeds in foreign operations, with the
• Definition International Fisher effect Explain States that the interest rate differential between two countries should be an unbiased predictor of the future change in the spot rate
• Definition International fund Explain A mutual fund that can invest only outside the United States
• Definition International market Explain Related: External market
• Definition International market index Explain Exchange tracking the performance of 50 American Depository Receipts traded on the AMEX, NYSE, and NASDAQ
• Definition International mutual fund Explain securities markets throughout the world, excluding the United States. A global fund, on the other hand, invests in both foreign and
• Definition Instrumentality Explain obligations are guaranteed by the full-faith-and-credit of the government, even though the agency's responsibilities are not
• Definition Instruments Explain Financial securities, such as money market instruments or capital market instruments
• Definition Insurable interest Explain relationship between a policy's insured person or property and the potential beneficiary. The beneficiary must have an insurable
• Definition Insurance agent Explain The insurance company representative and adviser who sells insurance policies
• Definition Insurance broker Explain company, who represents the interests of the buyer in searching for insurance coverage at the lowest cost and providing the highest benefit
• Definition Insurance claim Explain A claim for reimbursement from the insurance company when the insured has suffered a loss that is covered under an insurance policy
• Definition Insurance dividend Explain Money paid annually to policyholders participating in cash value life insurance policies
• Definition Insurance policy Explain policy and outlining what risks are insured, what insurance premiums are to be paid by the policyholder, what deductibles prevail, and all
• Definition Insurance premium Explain company based on risk factors that must be made by the insured to guarantee protection of property loss under an insurance policy
• Definition Insurance principle Explain The law of averages. The average outcome for many independent trials of an experiment will approach the expected value of the experiment
• Definition Insurance settlement Explain company to the insured to settle an insurance claim within the guidelines stipulated in the insurance policy
• Definition Insured Explain The property or persons covered by an insurance policy
• Definition IBES Explain See: Institutional Brokers Estimate System
• Definition Insured bond Explain A municipal bond backed both by the credit of the municipal issuer and by commercial insurance policies
• Definition Insured plans Explain Defined benefit pension plans that are guaranteed by life insurance products. Related: Non-insured plans
• Definition Intangible asset Explain typically a claim to future cash. Goodwill, intellectual property, patents, copyrights, and trademarks are examples of intangible assets
• Definition Integer programming Explain Variant of linear programming in which the solution values must be integers
• Definition Intercommodity spread Explain consisting of a long position and a short position in different but related commodities for example, speculating that the price
• Definition Intercompany loan Explain Loan made by one unit of a corporation to another unit of the same corporation
• Definition Intercompany transaction Explain Transaction carried out between two units of the same corporation
• Definition Interdelivery spread Explain refer the purchase of one month of a contract and selling another month in the same contract, in the hope that the price difference will
• Definition Interest Explain is expressed as a percentage rate over a period of time and reflects the rate of exchange of present consumption for future consumption
• Definition Interest coverage ratio Explain The ratio of earnings before interest and taxes to annual interest expense. This ratio measures a firm's ability to pay interest
• Definition Interest coverage test Explain issuance of additional long-term debt if the issuer's interest coverage would, as a result of the issue, fall below some specified
• Definition Interest deduction Explain An interest expense, such as interest on a margin account, that is allowed as a deduction for tax purposes
• Definition Interest equalization tax Explain Tax on foreign investment by residents of the U.S. which was abolished in 1974
• Definition Interest expense Explain Interest expense is the money the corporation or individual pays out in interest on loans
• Definition Interest-only loan Explain A loan in which payment of principal is deferred and interest payments are the only current obligation
• Definition Interest payments Explain Contractual debt payments based on the coupon rate of interest and the principal amount
• Definition Interest rate Explain The monthly effective interest rate. For example, the periodic rate on a credit card with an 18% annual percentage rate is 1.5% per month
• Definition Interest rate agreement Explain up-front premium, agrees to compensate the other at specific time periods if a designated interest rate (the reference rate) is different
• Definition Interest rate cap Explain An interest rate agreement in which payments are made when the reference rate exceeds the strike rate. Also called an interest rate ceiling
• Definition Interest rate on debt Explain The firm's cost of debt capital
• Definition Interest rate floor Explain An interest rate agreement in which payments are made when the reference rate falls below the strike rate. Related: Interest rate cap
• Definition Interest rate futures contract Explain interbank deposit rate or an underlying debt security. The value of the contract rises and falls inversely to changes in interest rates
• Definition Interest rate parity theorem Explain differential between two countries is equal to the difference between the forward foreign exchange rate and the spot rate
• Definition Inflation hedge Explain Investments designed to hedge against inflation and the loss of purchasing power associated with it
• Definition Inflation-indexed securities Explain Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity
• Definition Inflation risk Explain risk that changes in the real return the investor will realize after adjusting for inflation will be negative
• Definition Inflation uncertainty Explain are not known. It is a possible contributing factor to the makeup of the term structure of interest rates
• Definition Inflexible expenses Explain Expenses that cannot be adjusted or eliminated such as car payments or rental payments. Antithesis of flexible expenses
• Definition Information asymmetry Explain Condition that information is known to some, but not all, participants
• Definition Information content effect Explain The rise in the stock price following a dividend signal, or publication of some other related news
• Definition Information costs Explain Transactions costs that include the assessment of the investment merits of a financial asset. Related: Search costs
• Definition Information-motivated trades Explain Trades in which an investor believes he or she possesses pertinent information not currently reflected in the stock's price
• Definition Information services Explain Organizations that furnish investment and other types of information, such as information that helps a firm monitor its cash position
• Definition Informational efficiency Explain The speed and accuracy with which prices reflect new information
• Definition Informationless trades Explain reallocation of wealth or an implementation of an investment strategy that acts only on existing information
• Definition Infrastructure Explain A country's fundamental system of transportation, communications, and other aspects of its physical capabilities
• Definition Ingot Explain A bar of metal such as the type that the Federal Reserve System uses to store gold reserves
• Definition Inheritance tax return Explain Tax form required to determine the amount of state tax due on an inheritance
• Definition Initial filing Explain a form that is filed with the Securities and Exchange Commission in advance of a major event, such as a public offering or a share
• Definition Initial margin Explain buyers and sellers of futures contracts to ensure performance of the terms of the contract; (2) amount of cash or eligible securities
• Definition Initial margin requirement Explain proportion of the total market value of the securities that the investor must pay for in cash. The Security Exchange Act of 1934 gives the
• Definition Initiate coverage Explain a particular securities house; (2) Indication to cover short position by purchasing the underlying stock (this cancels out the short
• Definition Input-output tables Explain industry requires of the production of each other industry in order to produce each dollar of its own output
• Definition Inquiry Explain In-line expression of interest in a particular stock, usually asking the firm to bid for or offer stock
• Definition Insider information Explain that has not yet been made public. It is illegal for holders of this information to make trades based on it, however received
• Definition Insider trading Explain stockholders, or others who hold private inside information allowing them to benefit from buying or selling stock
• Definition Insider Trading Sanctions Act of 1984 Explain Act imposing civil and criminal penalties for insider trading violations
• Definition Insiders Explain of a corporation-in effect, those who have access to inside information about a company. An insider also is someone who owns more than 10
• Definition Insolvency risk Explain The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk
• Definition Insolvent Explain A firm that is unable to pay debts (its liabilities exceed its assets
• Definition Installment sale Explain The sale of an asset in exchange for a specified series of payments (the installments
• Definition Instinet (Institutional Networks Corporation) Explain serves as a vehicle for the fourth market. Instinet is registered with the SEC As a stock exchange it numbers among its subscribers a large
• Definition Institutional broker Explain A broker who buys and sells securities for institutional investors such as banks, and mutual funds, pensions
• Definition Institutional investors Explain insurance companies, depository institutions, pension funds, investment companies, mutual funds, and endowment funds
• Definition Institutionalization Explain markets by institutional investors, as opposed to individual investors. This process has occurred throughout the industrialized world
• Definition Indenture Explain that details specific terms of the bond issuance. Specifies legal obligations of bond issuer and rights of bondholders. An indenture spells
• Definition Independent auditor Explain A certified public accountant operating outside the company who can provide an accountant's opinion
• Definition Independent broker Explain NYSE member who executes orders for floor brokers and firms other than its own
• Definition Independent project Explain A project whose acceptance or rejection is independent of the acceptance or rejection of other projects
• Definition Index Explain changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month. Indexes
• Definition Index arbitrage Explain exploits divergences between actual and theoretical futures prices. An example is the simultaneous buying (selling) of stock index futures
• Definition Index fund Explain returns on a stock market index. Mutual fund whose portfolio matches that of a broad-based index such as the S;P 500 and whose performance
• Definition Index model Explain A model of stock returns using a market index such as the S;P 500 to represent common or systematic risk factors
• Definition Index option Explain A call or put option based on a stock market index
• Definition Index warrant Explain corporate or a sovereign entity as part of a security offering, and guaranteed by an option clearing corporation
• Definition Indexed bond Explain Bond whose payments are linked to an index, e.g., the consumer price index
• Definition Indexing Explain for construction of a portfolio of stocks designed to track the total return performance of an index of stocks
• Definition Indication Explain Autex) or customer of an interest in buying or selling stock, sometimes including specific volume and price; (2) approximation of where a
• Definition Indicated dividend Explain paid on a share of stock over the next 12 months if each dividend were the same amount as the most recent dividend. Usually represented by
• Definition Inventory Explain available for sale or in the process of being made ready for sale. They can be individually valued by several different means, including
• Definition Indication of interest Explain interest in purchasing (not commitment to buy) securities that are still in the underwriting stage and are being registered by the
• Definition Indicator Explain Technical or fundamental measurement that securities analysts use to forecast the market's direction, such as investment advisory
• Definition Indifference curve Explain function, where the horizontal axis measures risk and the vertical axis measures expected return. The curve connects all portfolios with
• Definition Indirect quote Explain For foreign exchange, the number of units of a foreign currency needed to buy one U.S. dollar
• Definition Individual Retirement Account (IRA) Explain established by an employed person. IRA contributions are tax deductible according to certain guidelines, and the gains in the account are
• Definition Individual Retirement Account (IRA) rollover Explain 039;s that enables a retiree or anyone receiving a lump-sum payment from a pension, profit-sharing, or salary reduction plan to transfer
• Definition Individual tax return Explain A tax return filed by an individual to account for their personal income and taxes payable
• Definition Inductive reasoning Explain The attempt to use information about a specific situation to draw a conclusion
• Definition Industrial production Explain Reserve Board focusing on the total output of all U.S. factories and mines on a monthly basis. Used as an economic indicator
• Definition Industrials Explain General term used in the financial markets to refer to companies manufacturing, producing, or distributing goods and services
• Definition Industry Explain The category describing a company's primary business activity. This category is usually determined by the largest portion of revenue
• Definition Infant industry argument Explain developing and emerging sectors of the economy need protection against international competition in order to establish themselves
• Definition Inflation Explain The rate at which the general level of prices for goods and services is rising
• Definition Inflation accounting Explain Accounting practices allowing for the effects of inflation
• Definition Inflation-escalator clause Explain increases or decreases in inflation depending on fluctuations in the cost of living, production costs, and so forth
• Definition In the box Explain Means that a dealer has a wire receipt for securities, indicating that effective delivery on them has been made
• Definition In competition Explain revealed trading interest to multiple brokers and that the trade will take place with the firm having the highest bid or lowest offer
• Definition In hand Explain Used in the context of general equities. Firm indicating control of a bid, offer, or order
• Definition In the hole Explain Below the inside market when one is attempting to sell the stock; at a significant discount. Antithesis of premium
• Definition In-house Explain keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt
• Definition In-house processing float Explain The time it takes the receiver of a check to process a payment and deposit it in a bank for collection
• Definition In-line Explain 1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall
• Definition In-the-money Explain higher than the underlying futures price, or a call option with a strike price lower than the underlying futures price. For example, if the
• Definition In play Explain Often used in risk arbitrage. Company that has become the target of a takeover, and whose stock has now become a speculative issue
• Definition In-and-out trader Explain A daytrader, or a speculator who buys and sells the same security on the same day
• Definition In the tank Explain Used in the context of general equities. Slang expression meaning market prices are dropping rapidly
• Definition In touch with Explain Having a sell inquiry in a stock (not a firm customer sell order), often entailing a capital commitment. Antithesis of looking for
• Definition In-substance defeasance Explain Process through which debt is removed from the balance sheet but not cancelled
• Definition Inactive asset Explain Asset not used in a productive manner at all times
• Definition Inactive post Explain Trading post on NYSE floor where inactive, lightly traded stocks are traded in 10-share lots as opposed to 100-share lots
• Definition Incentive fee Explain trading advisers or to any practitioner who achieves above-average returns. Sometimes called performance fee
• Definition Incestuous share dealing Explain Trading of shares between companies in order to create a tax or financial benefit for the companies involved
• Definition Income beneficiary Explain One who receives income from a trust
• Definition Income bond Explain contingent on sufficient earnings. These bonds are commonly used during the reorganization of a failed or failing business
• Definition Income dividend Explain Any payout to mutual fund shareholders resulting from interest, dividends, or other income
• Definition Income exclusion rule Explain The IRS rule that excludes certain types of income from taxation, e.g., welfare payments
• Definition Income fund Explain A mutual fund that seeks to provid to liberal current income from investments
• Definition Income investment company Explain managing a mutual fund whose primary purpose is income generation, typically investing in bonds and high dividend yielding stocks
• Definition Income limited partnership Explain A limited partnership whose main goal is income generation, e.g., real estate, oil equipment
• Definition Income property Explain Real estate purchased for the reasons of income generation
• Definition Income statement (statement of operations) Explain expenses, and income (the difference between revenues and expenses) of a corporation over some period of time
• Definition Income stock Explain Common stock with a high dividend yield and few profitable investment opportunities
• Definition Income tax Explain A state or federal government's levy on individuals as personal income tax and on the earnings of corporations as corporate income tax
• Definition Incontestability clause Explain preventing the insurer from revoking the policy after it has been in force for a year or two if the life insurance company discovers any
• Definition Incorporation Explain A legal process through which a company receives a charter and the state in which it is based allows it to operate as a corporation
• Definition Incremental cash flows Explain Difference between the firm's cash flows with and without a project
• Definition Incremental cost of capital Explain Average cost applicable to the issue of each additional unit of debt and equity
• Definition Incremental costs and benefits Explain a particular course of action is taken, compared to those that would have obtained if that course of action had not been taken
• Definition Incremental internal rate of return Explain Internal rate of return (I.R.R.) on the incremental investment from choosing a larger instead of a smaller project
• Definition Indemnify Explain Used in insurance policy agreements as to compensation for damage or loss. Hold harmless
• Definition Initial public offering (IPO) Explain the public. Securities offered in an IPO are often, but not always, those of young, small companies seeking outside equity capital and a
• Definition Industrial revenue bond (IRB) Explain A bond issued by local government agencies on behalf of corporations
• Definition Internal rate of return (IRR) Explain Discount rate at which net present value (NPV) investment is zero. The rate at which a bond's future cash flows, discounted back to
• Definition International Swap Dealers Association (ISDA) Explain Formed in 1985 to promote uniform practices in the writing, trading, and settlement of swaps and other derivatives
• Definition International Security Market Association (ISMA) Explain that regroups all the participants on the Eurobond primary and secondary markets. Establishes uniform trading procedures in the
• Definition Intermarket Trading System (ITS) Explain linking the trading floors of seven registered exchanges to permit trading among them in stocks listed on either the NYSE or AMEX and one
• Definition IBC's money fund report average Explain Report giving the average yield of all major money market funds
• Definition I-bonds Explain Treasury savings bonds with a 30-yeat maturity indexed to account for inflation
• Definition Identified shares Explain Stock or mutual fund whose purchase date and price may be identified for capital gains and tax purposes when shares sold
• Definition Idiosyncratic Risk Explain uncorrelated to the overall market risk. In other words, the risk that is firm-specific and can be diversified through holding a portfolio
• Definition I-I page Explain In over-the-counter trading, same as H-H page, but exclusively for OTC stocks
• Definition Illegal dividend Explain declared in violation of its charter and/or of state laws, typically because of the way it is calculated
• Definition Illiquid Explain cash flow needed to fulfill financial debts and meet obligations. In the context of investments, describes a lightly traded investment such
• Definition Imbalance of orders Explain many market orders of one kind-buy or to sell or limit orders to buy up or sell down, without matching orders of the opposite kind. An
• Definition Insurance Explain damage making payments in the form of premiums to an insurance company, which pays an agreed-upon sum to the insured in the event of loss
• Definition Immediate family Explain practice to refer to one's parents, brothers, sisters, children, relatives supported financially, father-in-law, mother-in-law, sister
• Definition Immediate payment annuity Explain An annuity contract paid by a single payment and with a specified payment plan the starts immediately after the contract is purchased
• Definition Immediate settlement Explain Delivery and settlement of securities within five business days
• Definition Immunization Explain The construction of an asset and a liability match that benefits from offsetting changes in value
• Definition Immunization strategy Explain to eliminate the portfolio's risk, in case of a general change in the rate of interest, through the use of duration
• Definition Impaired capital Explain When a company's total capital is less than the par value of all its capital stock
• Definition Impaired credit Explain Result of a borrower's reduced credit rating
• Definition Implied call Explain The right of the homeowner to prepay, or call, a mortgage at any time
• Definition Implied repo rate Explain contract can earn by buying an issue and then delivering it at the settlement date. Related: Cheapest to deliver issue
• Definition Implied volatility Explain s return derived from its option price, maturity date, exercise price, and riskless rate of return, using an option pricing model such as
• Definition Import substitution development strategy Explain Latin American countries and other L.D.C.s that emphasize import substitution-accomplished through protectionism-as the route to economic
• Definition Imputation tax system Explain Arrangement by which investors who receive a dividend also receive a tax credit for corporate taxes that the firm has paid
• Definition Imputed interest Explain Used in accounting to refer to interest that has effectively been paid to a bondholder, even though no money has actually been paid
• Definition Imputed value Explain service, or company that is not physically recorded in any accounts but is implicit in the product, e.g., the opportunity cost of cash
• Definition In the middle Explain Used in the context of general equities. At a price exactly in between the bid and offer prices
• Definition I Explain Fifth letter of a Nasdaq stock symbol specifying that it is the third preferred bond of the company
• Definition Institutional Brokers' Estimate System (IBES) Explain estimates of future earnings for thousands of publicly traded companies, detailing how many estimates are available for each company and
• Definition International Banking Facility (IBF) Explain A branch that an American bank establishes in the United States to do Eurocurrency business
• Definition International Bank for Reconstruction and Development (IBRD) Explain IBRD or World Bank makes loans at nearly conventional terms to countries for projects of high economic priority
• Definition Information Coefficient (IC) Explain actual stock returns, sometimes used to measure the contribution of a financial analyst. An IC of 1.0 indicates a perfect linear
• Definition International Depository Receipt (IDR) Explain of ownership of one or more shares of the underlying stock of a foreign corporation that the bank holds in trust. The advantage of the IDR
• Definition International Finance Corporation (IFC) Explain that produces a number of well-known stock indexes for emerging markets. Its major role is to provide financing for projects in less
• Definition International Monetary Fund (IMF) Explain oversee exchange arrangements of member countries and to lend foreign currency reserves to members with short-term balance of payment
• Definition International Monetary Market (IMM) Explain A division of the CME established in 1972 for trading financial futures. Related: Chicago Mercantile Exchange (CME
• Definition Interest-only strip (IO) Explain payments from a pool of mortgages, Treasury bonds, or other bonds. Once the principal on the mortgages or bonds has been repaid, interest
• Definition Immediate or cancelled order (IOC order) Explain to be executed in whole or in part as soon as such order is represented in the trading crowd. The portion not executed is to be treated as
• Definition Index and Option Market (IOM) Explain A division of the CME established in 1982 for trading stock index products and options
• Definition Investment product line (IPL) Explain The line of required returns for investment projects as a function of beta (nondiversifiable risk

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Investment Product Line (Ipl), Index And Option Market (Iom), Immediate Or Cancelled Order (Ioc Order), Interest-Only Strip (Io), International Monetary Market

Investment Product Line (Ipl), Index And Option Market (Iom