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.
Immediate Payment Annuity An annuity contract that is purchased with one payment and has a specified payment plan which starts immediately.
Immunization A strategy that matches the durations of assets and liabilities, thereby minimizing the impact of interest rates on the net worth.
Impact Day The day that a corporation has a secondary offering of shares to the public.
Impaired Asset An asset with a market value that is worth less than its book value.
Impaired Credit The deterioration of a borrower's credit rating.
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.
Implicit Cost A cost that is represented by lost opportunity in the usage of a company's own resources, excluding cash.
Implied Volatility - IV The estimated volatility of a security's price.
Import In reference to international trade, these are goods brought into one country from another.
Impression An advertisement's (usually a banner ad) appearance on a web page. Ad space is often sold on a CPM basis.
Imputed Interest A term used to describe interest considered to be paid, even through no interest payment has been made.
In and Out The purchase and sale of an investment over a short period of time.
In Sight A term that describes deliverable grades of commodities underlying futures contracts that are held within approved delivery facilities near terminals, centralized locations, or production areas.
In Street Name A brokerage account where the customer's securities and assets are held in the name of the brokerage firm, rather than you holding the stock certificate yourself. The customer is still listed as the real or beneficial owner.
In the Money For a call option, in-the-money is when the option's strike price is below the market price of the underlying stock. For a put option, in-the-money is when the strike price is above the market price of the underlying stock.
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 some other reason.
In-Service Withdrawal A withdrawal made from a plan account before the holder experiences a triggering event.
Inactivity Fee A fee charged to investors whose trading activity meets their brokerages' criteria for an inactive account.
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.
Income Money received by a person or organization because of effort (work) or from return on investments.
Income Elasticity of Demand A measure of the relationship between a change in income and a change in quantity of a good demanded:
Income From Operations - IFO The profit realized from a business' own operations.
Income Fund A mutual fund that seeks to provide stable current income by investing in securities that pay interest or dividends.
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.
Income Shifting A strategy of moving a person's income from a high income bracket or tax rate to a lower one.
Income Statement A financial report that--by summarizing revenues and expenses, and showing the net profit or loss in a specified accounting period--depicts a business entity’s financial performance due to operations as well as other activities rendering gains or losses. Also known as the "profit and loss statement" or "statement of revenue and expense."
Income Stock A stock with a history of regular dividend payments that constitute the largest portion of the stock's overall return.
Income Tax A tax on any money earned during a fiscal year, usually filed on a yearly basis. All businesses except partnerships must file an annual income tax return. Partnerships file an information return.
Income Trust An investment trust that holds assets which are income producing. The income is passed on to the unit holders.
Incoterms Trade terms, published by the International Chamber of Commerce (ICC), that are commonly used in international contracts.
Incremental Cost The encompassing change that a company experiences within its balance sheet due to one additional unit of production.
Incumbency Certificate An official document that lists the names of incumbent individuals and their respective corporate office within an organization.
Incumbent An individual that is responsible for a specific office within a corporation.
Indemnity A contractual agreement made between different parties to compensate for any damages or losses.
Indenture A contract between an issuer of bonds and the bondholder stating the time period for re-payment, amount of interest paid, if the bond is convertible (and if so, at what price or what ratio), and the amount of money that is to be re-paid.
Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report.
Index A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is essentially 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 changes is more important that the actually numeric value. For example, knowing that a stock exchange is at, say, 5000 doesn't tell you much. However, knowing that the index has risen 30% over the last year to 5000 gives a much better demonstration of performance. The plural of index can be spelled either indexes or indices.
Index Amortizing Note - IAN A type of structured note whose payment schedule is determined by the behavior of interest rates.
Index Amortizing Swap A swap whereby the notional principal amount of the agreement is amortized according to the movement of an underlying rate.
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.
Index Fund A portfolio of investments that are weighted the same as a stock-exchange index in order to mirror its performance. This process is also referred to as indexing.
Index Futures A futures contract on a stock or financial index, such as the S&P 500. Each index can have a different multiple for determining the price of the future.
Index Hugger A mutual fund that tends to perform very similar to a benchmark index like the S&P 500.
Index Option A call or put option on a financial index.
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.
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.
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.
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.
Indicator Anything used to predict future financial or economic trends.
Indirect Quote A foreign exchange rate quoted as the foreign currency per unit of the domestic currency.
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.
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.
Individual Retirement Account - IRA An IRA is a retirement investing tool that can be either an Individual Retirement Account or an Individual Retirement Annuity. 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 specified 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's contributions are made to SEP IRAs and SIMPLE IRAs.
Industry A category used to describe a company's primary business activity, usually determined by the largest source of a company's revenues.
Industry Bet When an investor or portfolio manager increases (or decreases) holdings in a particular industry.
Infant Industry Theory A school of thought that believes emerging domestic industries should be protected until they become stable and mature.
Inflation The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
Inflation Risk The uncertainty over the future real value (after inflation) of your investment.
Inflation-Indexed Security A security that guarantees a return higher than the rate of inflation if it is held to maturity.
Inside Director Any member of a company's board of directors who is either an employee or stakeholder in the company.
Inside Market The highest quoted bid and the lowest offer price among competing market makers in a security trading on the NASDAQ market.
Inside Quote The highest bid and lowest offer price for a security quoted among all of the market makers competing in a security.
Insider Any person who has or has access to valuable nonpublic information about a corporation.
Insider Information Material information about a company's activities that has not been disclosed to the public.
Insider Trading The buying or selling of a security by someone who has access to material, nonpublic information about the security.
Insolvency When a company can no longer meet its debt obligations with another firm or institution.
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.
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.
Institutional Fund A mutual fund targeting high value investors with low fees, but high minimum requirements.
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 less protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.
Intangible Asset An asset that is not physical in nature.
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.
Inter-Vivos Trust A trust created during the lifetime of the trustor.
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 Coverage Ratio A ratio used to determine how easily a company can pay interest on outstanding debt. The 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:
Interest Expense The amount reported by a company or individual as an expense for borrowed money or long-term debt.
Interest Only (IO) Strips A security based solely on interest payments from a bond.
Interest Rate The monthly effective rate paid (or received if you are a creditor) on borrowed money. Expressed as a percentage of the sum borrowed.
Interest Rate Ceiling The absolute maximum rate of interest that a financial institution can charge for an adjustable rate mortgage or loan.
Internal Revenue Service - IRS A United States government agency that is responsible for the collection and enforcement of income tax.
Internalization A decision made by a brokerage to fill an order with the firm's own inventory of stock.
International Accounting Standards - IAS A set of standards stating how particular types of transactions and other events should be reflected in financial statements.
International Association of Financial Engineers - IAFE An organization comprised of scholars and specialists from various areas of financial concern.
International Banking Facility - IBF Facilities that accept deposits and offer loans to foreign customers and businesses.
International Bond Bonds that are issued in a country by a non-domestic entity.
International Depository Receipt - IDR A negotiable, bank-issued certificate representing ownership of stock securities by an investor outside the country of origin.
International Fund A mutual fund that can invest in companies located anywhere outside of your own country.
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.
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 National Numbering Agency (NNA).
Internet Service Provider - ISP A company that furnishes corporations and individual consumers with various services, mainly access to the Internet.
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.
Interpositioning An illegal action of a specialist or broker-dealer unnecessarily inserting him/herself into a natural transaction between a buyer and seller in order to pocket an improper profit.
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.
Intestacy The act of dying without a legal will.
Intraday Another way of saying "within the day."
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:
Intramarket Sector Spread The yield spread between two fixed-income securities with the same maturity within the same sector.
Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the 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 difference between the underlying stock's price and the strike price is negative, the value is given as zero.
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.
Inventory Inventory can be either raw materials, finished items already available for sale, or goods in the process of being manufactured. Inventory is recorded as an asset on a company's balance sheet.
Inventory Turnover A ratio that shows how many times the inventory of a firm is sold and replaced over a specific period.
Inverse Floater A bond or other type of debt whose coupon rate changes inverse (opposite) to short term interest rates.
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.
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.
Inverted Yield Curve Usually a chart showing long-term debt instruments that have lower yields than short-term debt instruments. It is sometimes referred to as a negative yield curve.
Invest, then Investigate An investment strategy where investors immediately purchase a stock and then do research and due diligence afterwards.
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.
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.
Investment An asset or item with value that is purchased for income or capital appreciation.
Investment Advisor 1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission.
2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and securities within the fund's portfolio in order to achieve the fund's objectives.
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.
Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities.
Investment Climate The general economic conditions affecting the financial markets.
Investment Club A group of several investors who collectively pool their money and knowledge to make larger investments, learn about investing, and diversify their portfolios.
Investment Company Act of 1940 Created in 1940 through an act of Congress, this piece of legislation clearly defines the responsibilities and limitations placed upon fund companies that offer investment products to the public.
Investment Farm A farm owned solely for investment purposes.
Investment Grade 1. In the case of a stock, a firm that has a strong balance sheet, considerable capitalization, and is recognized as a leader in its industry.
2. In the case of fixed income, a bond with a rating of BBB or higher.
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.
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.
Investment Real Estate Real estate that generates income.
Investment Vehicle In general, any method by which to invest.
Investor Relations - IR A department, present in most medium to large public companies, that provides investors with an accurate account of the affairs of the company. This helps investors to make informed buy or sell decisions.
Invisible Hand Coined by 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."This "invisible hand" is essentially a natural phenomenon that guides free markets and capitalism through competition for scarce resources.
Invisible Supply Physical stocks of a commodity that are available for delivery upon futures contracts, but whose quantities cannot be accurately identified.
IOU An abbreviation of the phrase "I owe you." ;
IPO Lock-up A legally binding contract between the underwriters and insiders of the company undergoing an initial public offering (IPO). The contract prevents them from selling any shares of stock for a specified period of time.
IQD In currencies, this is the abbreviation for the Iraqi Dinar.
IRA Adoption Agreement and Plan Document A contract between the IRA holder and the financial institution, the IRA plan document explains the provisions of the IRA.
Iridium A corrosive resistant element that is sometimes used to harden platinum.
Issued Shares Those shares of a company's authorized shares that have been issued.
Issuer 1. The entity, such as a corporation or municipality, that offers (or proposes to offer) its securities for sale.
2. The creator of an option, sometimes referred to as the writer.
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.