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Idle Funds
Funds in an account that are in excess of the compensating balance requirement and that have not be invested or put to use. The compensating balance requirement is specified by the loan agreement to compensate for services, checks, etc.
If, As and When
Indicates a conditional transaction in a security that is authorized for issuance, but not issued yet. New primary offerings can trade on an "if, as and when" issued basis prior to listing on an exchange.
Illiquid Market
A market that has no volume that subsequently creates a lot of slippage due to lack of trading volume.
Immediate/Cancel
An order that must be filled immediately or canceled.
iMoneyNet's Money Fund Report Average
An average for all major money market mutual fund yields, published weekly for 7-day and 30-day simple and compound (dividend reinvestment assumed) yields. iMoneyNet also tracks average maturity of securities in money fund portfolios. Published in major newspapers such as the New York Times, Barron's and the Wall Street Journal.
Implied Alpha
The excess return expected from a stock to justify its current weighing in the portfolio.
Implied Volatility
The volatility computed using the actual market prices of an option contract and one of a number of pricing models. For example, if the market price of an option rises without a change in the price of the underlying stock or future, implied volatility will have risen.
Impulse
A sharply defined change in a series of input data being studied, such as market prices or volume.
Impulse Wave
A wave or cycle of waves that carries the current trend further in the same direction.
Inactive Market
Refers to a securities or commodities market characterized by light trading and greater fluctuations in prices relative to volume than would be the case if trading were active. If the price of a stock falls more than a point between round lot trades without apparent explanation other than lack of interest resulting in too few orders, the market is said to be inactive.
In-and-Out
The purchase and sale of the same security within a short period of time, usually a day, week or month. An in-and-out trader is more interested in profiting from day-to-day price fluctuations than in receiving dividends or long-term growth.
Income Bond
Generally, an income bond promises to repay principal but only to pay interest when the company earns a certain amount of money. In some cases, if the interest is unpaid on an income bond, it may accumulate as a claim against the company when the bond matures.
Income Dividends
Payments to mutual fund shareholders consisting of dividends, interest and short-term capital gains earned on the fund's portfolio securities after deduction of operating expenses.
Income Fund
A mutual fund that seeks to provide stable current income by investing in securities that pay interest or dividends.
Income Stock
A common stock that pays, or is expected to pay, an attractive dividend to shareholders. Usually stock from a more mature company that does not expect expansion or growth-therefore money is not required internally for equipment, etc.
Independent Brokerage Firm
An investment company that is not owned by a bank, trust or insurance company. It is generally felt that these companies' brokers are free from the conflict of interests that can arise from non-independent firms. Independent companies are generally smaller and tailor their services to specific investor groups.
Index
An index is a group of stocks that make up a portfolio in which performance can be monitored based upon one calculation.
Index Options
Call options and put options on indexes of stocks designed to reflect and fluctuate with market conditions. Broad-based indexes cover a wide range of industries and companies and narrow-based indexes cover stocks in one industry or economic sector. Index options allow investors to trade in a specific industry group or market without having to buy all the stocks individually.
Indicated Dividend
Total amount of dividends that would be paid on a share of stock over the next 12 months if each dividend were the same amount as the most recent dividend. Usually represent by the letter "e " in stock tables.
Indicated Yield
The yield, based on the most recent quarterly rate times four. To determine the yield, divide the annual dividend by the price of the stock. The resulting number is represented as a percentage.
Individual Retirement Account (IRA)
A retirement investing tool for employed individuals that allows an annual contribution of 100% of earned income up to a maximum of $2,000. Some or all of the contribution may be deductible from current taxes, depending on the individual's adjusted gross income and coverage by employer-sponsored qualified retirement plans.
Inductive Logic
The progress from statements describing particular events to a general statement.
Industry
The category describing a company's primary business activity. This is usually determined by the largest portion of revenue.
Inflation
Increases in the general price level of goods and services; i.e., your dollar won't buy as much as it used to. Inflation is commonly reported using the Consumer Price Index (CPI) as a measure. Inflation is one of the major risks to investors over the long term as savings may actually buy less in the future if they are not invested with inflation as a consideration. Inflation rate refers to the rate of change in prices.
Initial Balance
The first or first two half-hour trading periods in the CBOT Market Profile during which prices tend to converge; the initial auction of the trading day.
Initial Performance Bond
The funds required when a futures position (or a short options on futures position) is opened.
Initial Public Offering (IPO)
The first sale of common stock by a corporation to the public. Securities offered in an IPO are often, but not always, those of young, small companies seeking outside equity capital and a public market for their stock. Investors purchasing stock in IPOs generally must be prepared to accept very large risks for the possibility of large gains. IPOs by investment companies (closed end funds) usually contain underwriting fees, which represent a load to buyers.
In Play
Refers to a stock affected by takeover activities or rumors. A stock that is the focus of a public bidding contest, as in a takeover or bear raid.
Inside Day
A day in which the daily price range is completely within the previous day's daily price range.
Inside Information
Material information that has not been disseminated to, or is not readily available to, the general public.
Insider
Any person who has or has access to material non-public information about a corporation. Insiders include directors, officers and stockholders who own more than 10% of any class of equity security of a corporation.
Insider Information
Relevant information about a company that has not yet been made public. It is illegal for holders of this information to make trades based on it, however received.
Insider Report
A report of all transactions in the shares of a company made by those considered to be insiders of the company. It is submitted each month to the provincial securities commissions and allows the administrators to monitor trading by such people to ensure regulations are not violated.
Insolvency
A firm is considered insolvent when it cannot meet its financial obligations as they become due.
Installment Debentures
A bond or debenture issue in which a predetermined amount of the principal becomes due and payable each year. Also called a serial bond or debenture. This is popular as a municipal financing vehicle.
Installment Receipts
A new issue of stock sold with the obligation that buyers will pay the issue price in a series of installment payments instead of one lump sum payment. This is also known as partially paid shares. The buyer usually pays a deposit upon settlement, perhaps one-half the issue price of the shares, with the balance to be paid in one year.
Institutional Clients
The sales department of a securities firm serves two categories of clients. The institutional segment deals with banks, insurance companies, trust companies, pension fund managers and large corporations. The retail branch deals with individual investors.
Institutional Investor
A person or organization that trades securities in large enough share quantities or dollar amounts that it qualifies for preferential treatment and lower commissions. An institutional order can be of any size. Institutional investors are covered by fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.
Intangible Asset
An asset that has no physical substance, such as goodwill, patents, trademarks and copyrights.
Interest Rate
The charge for the privilege of borrowing money, usually expressed as an annual percentage rate.
Interest Rate Driven
Refers to a point in the business cycle when interest rates are declining and bond prices are rising. This is usually enough to inspire a stock market rally as money shifts from interest rate instruments to equity based instruments.
Interest Rate Risk
The potential for gains or losses resulting from fluctuations in the market price of fixed-income securities (debt or preferred shares). Such price fluctuations are a consequence of changes in prevailing interest rate levels.
Interest Rate Swaps
An arrangement that requires both sides of the transaction to make payments to each other based on two different interest rates. The most commonly traded requires one side to pay a fixed rate and the other to pay a floating rate.
Interim Certificates
When a new issue of a security is marketed, temporary certificates, called interim certificates, are sometimes delivered. These are later exchanged for permanent or definitive certificates.
Interim Statements
These are financial statements issued for a certain period within a fiscal year, such as a three-month or first quarter interim statement.
Inter-market Analysis
Observing the price movement of one market for the purpose of evaluating a different market.
Inter-market Spread
A spread consisting of opposing positions in instruments with two different markets.
Internal Rate of Return (IRR)
The discount rate that, when applied to the net cash flows of an investment, yields a net present value of zero. The internal rate of return represents the effective yield that a project provides in each time period on the net funds invested.
International Banking
International banking includes the operation of bank branches and subsidiaries located outside the U.S., the supervision of correspondent banking relationships, foreign exchange trading and trade finance.
International Chamber of Commerce
A world business organization that brings business people and experts together to formulate policies in such areas as banking, taxation and the environment.
International Finance Corporation Investable Index (IFCI)
A benchmark against which portfolios invested in emerging markets can be compared. "Investable" means it accounts for foreign ownership restrictions that are in place in various countries.
International Organization for Standardization (ISO)
An international organization created to promote standardization around the world.
In-the-Money
If you were to exercise an option and it would general a profit at the time, it is known to be in the money. For example, when a commodity price is $500, a call option with a strike price of $400 is considered in-the-money.
In-the-Money Option
A call option is in-the-money if the strike price is less than the market price of the underlying security. A put option is in-the-money if the strike price is greater than the market price of the underlying security. For example, an XYZ call option with a 52-strike price is in-the-money when XYZ trades at 52 1/8 or higher. An XYZ put option with a 52-strike price is in-the-money when XYZ is trading at 51 7/8 or lower.
Intrinsic Value
The amount by which a market is in-the-money. Out-of-the-money options have no intrinsic value. Calls = underlying - strike price. Puts = strike price - underlying.
Inventory
For most companies this is merchandise, raw materials, unfinished products and finished products of a business that have not yet been sold. Investment dealers hold inventories of shares, bonds, debentures and other investment products to fill long and short positions for clients.
Inverse Relationship
Two or more markets that act totally opposite of one another producing negative correlations.
Investment
1. As used in economics, spending on capital goods such as factories, mines and machinery, so as to increase the productive capacity of the economy.
2. In its broader meaning, investment is any purchase of an asset to increase future income.
Investment Advisor
1. Any person who makes investment recommendations in return for a flat fee or percentage of assets managed.
2. For investment companies, the individual who has the day-to-day responsibility of investing the cash and securities held in the fund's portfolio in accordance with the objectives stated in the fund's prospectus.
Investment Banker
An institution in the business of raising capital for corporations and municipalities. An investment banker may not accept deposits or make commercial loans.
Investment Banking
Bank operations that manage a bank's funding position, as well as its holdings of Treasury bills, bonds and preferred and common stock.
Investment Capital
Initial investment capital necessary for starting a business that usually consists of inventory, equipment, pre-opening expenses and leaseholds.
Investment Club
Two or more people who pool their money together do invest.
Investment Counselor
A specialist in the investment industry paid by fee to provide advice and research to investors with larger sized accounts.
Investment Dealer
This refers to securities firms that employ investment advisors to work with retail and institutional clients and has underwriting, trading and research departments.
Investment Grade
Refers to a bond with a rating of AAA to BBB. (See also: Junk Bonds)
Investment Pyramid
A portfolio strategy that allocates investable assets according to the relative safety of the investment. The base of the pyramid is composed of low-risk investments, the mid-portion is composed of growth investments and the top of the pyramid is composed of speculative investments.
Investment Trust
A closed-end fund regulated by the Investment Company Act of 1940. These funds have a fixed number of shares that are traded on the secondary markets similarly to corporate stocks. The market price may exceed the net asset value per share, in which case it is considered at a "premium."
Investor
A person whose principal concern in the purchase of a security is the minimizing of risk, compared to the speculator who is prepared to accept calculated risk in the hope of making better-than-average profits, or the "gambler" who is prepared to take even greater risks. More generally it refers to people who invest money in investment products.
Iron Butterfly
The combination of a long (short) straddle and a short (long) strangle. All options must have the same underlying and have the same expiration.
Irregular Flat
A type of Elliott wave correction that has a 3-3-5 wave pattern, where the B wave terminates beyond the start of wave A. A "flat" is in progress, implying that a larger pattern is developing. It will contain waves of one higher degree than the A-B-C waves just completed.
Issue and New Issue
An issue can be any of a company's securities, or the act of distributing such securities. A new issue is a class of stock or bond sold by a corporation for the first time.
Issued Capital
Refers to that portion of authorized capital that has been sold to the public in the form of common and preferred shares.
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: the issuer of an over-the-counter option is the option writer, and the issuer of a listed option is the Options Clearing Corporation.
Issuer Bid
An offer by an issuer to buy back some of its own securities. This is usually done because the company feels the market is undervaluing its securities.
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