- Immunization strategy
- A bond portfolio strategy whose goal is to immunize a portfolio against a general change in the rate of interest.
- Implied repo rate
- The rate that a seller of a futures contract can earn by buying an issue and then delivering it at the settlement date. Related: Cheapest to deliver issue
- Implied volatility
- The expected volatility in a stock's return derived from its option
price, using an option-pricing model.
- Income statement
- A statement showing the revenues, expenses, and income (the
difference between revenues and expenses) of a corporation over some period of
- Index and Option Market (IBM)
- A division of the CME established in 1982 for trading
stock index products and options. Related: Chicago Mercantile Exchange (CME)
- Index warrant
- A stock index option issued by either a corporate or sovereign entity as
part of a security offering, and guaranteed by an option clearing corporation.
- A passive instrument strategy consisting of the construction of a portfolio of
stocks designed to track the total return performance of an index of stocks.
- Indifference curve
- The graphical expression of a utility function, where the horizontal
axis measures risk and the vertical axis measures expected re-turn.
- Inflation risk
- Also called purchasing-power risk, the risk that changes in the real
return the investor will realize after adjusting for inflation will be negative.
- Information coefficient (IC)
- The correlation between predicted and actual stock
returns, sometimes used to measure the value of a financial analyst. An IC of 1.0
indicates a perfect linear relationship between predicted and actual returns, while an
IC of 0.0 indicates no linear relationship.
- Information costs
- Transaction costs that include the assessment of the investment
merits of a financial asset. Related: Search costs
- Information-motivated trades
- Trades in which an investor believes he or she
possesses pertinent information not currently reflected in the stock's price.
- Informationless trades
- Trades that are the result of either a reallocation of wealth or
an implementation of an investment strategy that only utilizes existing information.
- Initial margin requirement
- When buying securities on margin, the 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 board of governors of the Federal Reserve
the responsibility to set initial margin requirements, but individual brokerage firms are
free to set higher requirements. In futures contracts, initial margin requirements are
set by the exchange.
- Input-output tables
- Tables that indicate how much each industry requires of the
production of each other industry in order to produce each dollar of its own output.
- Institutional investors
- Organizations that invest, including insurance companies,
depository institutions, pension funds, investment companies, and endowment funds.
- The gradual domination of financial markets by institutional
investors, as opposed to individual investors. This process has occurred throughout
the industrialized world.
- Insured bond
- A municipal bond backed both by the credit of the municipal issuer
and by commercial insurance policies.
- Insured plans
- Defined benefit pension plans that are guaranteed by life insurance
products. Related: Non-insured plans
- Intangible asset
- A legal claim to some future benefit, typically a claim to future cash.
Financial assets, also called financial instruments or securities, are intangible assets.
- Interest coverage ratio
- The ratio of the earnings available for paying the interest for
a given year to the annual interest expense.
- Interest rate agreement
- An agreement whereby one party, for an upfront premium,
agrees to compensate the other at specific time periods if a designated interest rate
(the reference rate) is different from a predetermined level (the strike rate).
- Interest rate cap
- Also called an interest rate ceiling, an interest rate agreement in
which payments are made when the reference rate exceeds the strike rate.
- Interest rate ceiling
- Related: Interest rate cap
- Interest rate floor
- An interest rate agreement in which payments are made when the
reference rate falls below the strike rate.
- Interest rate risk
- For a bond, the risk that a rise in interest rates will decrease the
bond's price. For a depository institution, also called funding risk, the risk that spread
income will suffer because of a change in interest rates.
- Interest rate swap
- A binding agreement between counterparties to exchange
periodic interest payments on some predetermined dollar principal, which is called the
notional principal amount.
- Intermarket sector spread
- The spread between the interest rate offered in two
sectors of the bond market for issues of the same maturity.
- Intermarket spread swaps
- An exchange of one bond for another based on the
manager's projection of a realignment of spreads between sectors of the bond market.
- Internal market
- The mechanisms for issuing and trading securities within a nation,
including its domestic market and foreign market. Compare external market.
- Internally efficient market
- Operationally efficient market
- Internal rate of return
- Dollar-weighted rate of return
- International Depositary Receipt (IDR)
- A receipt issued by a bank as evidence 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 structure is that the corporation
does not have to comply with all the regulatory issuing requirements of the foreign
country where the stock is to be traded. The U.S. version of the IDR is the American
Depositary Receipt (ADR).
- International market
- Related: See external market.
- International Monetary Market (IMM)
- A division of the CME established in 1972 for
trading financial futures. Related: Chicago Mercantile Exchange (CME)
- A put option that has a strike price higher than the underlying futures
price, or a call option with a strike price lower than the underlying futures price. For
example, if the March COMEX silver futures contract is trading at $6 an ounce, a
March call with a strike price of 550 would be considered in-the-money by $0.50 an
ounce. Related: Put
- Intramarket sector spread
- The spread between two issues of the same maturity
within a market sector. For instance, the difference in interest rates offered for five-
year industrial corporate bonds and five-year utility corporate bonds.
- Intrinsic value
- The amount by which an option is in-the-money. An option which is
not in-the-money has no intrinsic value. Related: In-the-Money
- Inventory turnover
- The ratio of the cost of goods sold to the average inventory for a
- Inverted market
- A futures market in which the nearer months are selling at price
premiums to the more distant months. Related: Premium
- Investment analysts
- Related: Financial analysts
- Investment grade
- A bond that is assigned a rating in the top four categories by
commercial credit ratrating companies. Related: High-yield bond
- Investment income
- The revenue from a portfolio of invested assets.
- Investment management
- Also called portfolio management and money
management, the process of managing money.
- Investment manager
- Also called a portfolio manager and money manager, the
individual who manages a portfolio of investments.
- Investment value
- Related: Straight value
- The owner of a financial asset.
- Investor's equity
- The balance of a margin account. Related: Buying on margin, Initial margin requirement.
- Invoice price
- The price that the buyer of a futures contract must pay the seller when
a Treasury bond is delivered.
- A particular financial asset.
- An entity that issues a financial asset.
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