eFinancialCareers

I
Fifth letter of a Nasdaq stock symbol specifying that it is the third preferred bond of the company.

I-bonds
Treasury savings bonds with a 30-year maturity indexed to account for inflation.

I-I page
In over-the-counter trading, same as H-H page, but exclusively for OTC stocks.

IBC's money fund report average
Report giving the average yield of all major money market funds.

IBES
See: Institutional Brokers Estimate System

IBF
See: International Banking Facility

IBRD
See: International Bank for Reconstruction and Development

IC
See: Information Coefficient

ICC
See: International Chamber of Commerce

ID
The two-character ISO 3166 country code for INDONESIA.

IDC
See: Interest During Construction

Identified shares
Stock or mutual fund whose purchase date and price may be identified for capital gains and tax purposes when shares sold.

Idiosyncratic Risk
Unsystematic risk or risk that is uncorrelated to the overall market risk. In other words, the risk that is firm-specific and can be diversified through holding a portfolio of stocks.

IDR
The ISO 4217 currency code for the Indonesian Rupiah.

IDR
See: International Depository Receipt

IE
The two-character ISO 3166 country code for IRELAND.

IEP
The ISO 4217 currency code for the Irish Punt.

IFC
See: International Finance Corporation

IL
The two-character ISO 3166 country code for ISRAEL.

Illegal dividend
A corporation's dividend that is declared in violation of its charter and/or of state laws, typically because of the way it is calculated.

Illiquid
In the context of finance. absence of cash flow needed to fulfill financial debts and meet obligations. In the context of investments, describes a lightly traded investment such as a stock or bond that is not easily converted into cash.

ILS
The ISO 4217 currency code for the Israeli Shekel.

Imbalance of orders
Used for listed equity securities. Too 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 imbalance usually follows a dramatic event such as a takeover, research recommendation, or death of a key executive, or a government ruling that will significantly affect the company's business. If it occurs before the stock exchange opens, trading in the stock is delayed. If it occurs during the trading day, the specialist halts and then suspends trading (with floor governor's approval) until enough matching orders can be found to make an orderly market.

IMF
See: International Monetary Fund

IMM
See: International Monetary Market

Immediate or canceled order (IOC order)
Market or limited price order that is 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 canceled. A stop is considered an execution in this context. See: AON order, FOK order.

Immediate family
Term used in the NASD rules of fair practice to refer to one's parents, brothers, sisters, children, relatives supported financially, father-in-law, mother-in-law, sister-in-law, and brother-in-law.

Immediate payment annuity
An annuity contract paid by a single payment and with a specified payment plan that starts immediately after the contract is purchased.

Immediate settlement
Delivery and settlement of securities within five business days.

Immunization
The construction of an asset and a liability match that benefits from offsetting changes in value.

Immunization strategy
A bond portfolio strategy whose goal is to eliminate the portfolio's risk, in case of a general change in the rate of interest, through the use of duration.

Impaired capital
When a company's total capital is less than the par value of all its capital stock.

Impaired credit
Result of a borrower's reduced credit rating.

Imperfect market
Economic environment in which the costs of labor and other resources used for production encourage firms to use substitute inputs that less costly.

Implicit Bankruptcy Costs
Opportunity costs incurred prior to the bankruptcy process such as the loss of sales or financing.

Implicit tax
Lower or higher before-tax required returns on assets that are subject to lower or higher tax rates.

Implied call
The right of the homeowner to prepay, or call, a mortgage at any time.

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, maturity date, exercise price, and riskless rate of return, using an option pricing model such as Black-Scholes.

Import Quota
Puts limits on the quantity of certain products that can be legally imported into a particular country during a particular time frame. There is a Fixed quota, which is a maximum quantity not to be exceeded, and tariff rate surcharge, which permits additional quantities but at much higher duty.

Import substitution development strategy
A development strategy followed by many Latin American countries and other LDCs that emphasize import substitution-accomplished through protectionism-as the route to economic growth.

Import/export letters of credit
Bank or financial institution issuance's of funds in a certain amount provided to facilitate international trade.

Imputation tax system
Arrangement by which investors who receive a dividend also receive a tax credit for corporate taxes that the firm has paid.

Imputed interest
Used in accounting to refer to interest that has effectively been paid to a bondholder, even though no money has actually been paid.

Imputed value
Refers to the value of an asset, service, or company that is not physically recorded in any accounts but is implicit in the product, e.g., the opportunity cost of cash remaining in a savings account and not invested.

IN
The two-character ISO 3166 country code for INDIA.

In & out
Refers to over-the-counter trading. Trade in which the trader has both the buyers and sellers lined up for a clean trade. See: Cross

In between
Used in the context of general equities. Priced higher than the bid price but lower than the offer price. See: In the middle

In competition
Indication that the customer has revealed trading interest to multiple brokers and that the trade will take place with the firm having the highest bid or lowest offer. Antithesis of exclusive.

In hand
Used in the context of general equities. Firm indicating control of a bid, offer, or order.

In play
Often used in risk arbitrage. Company that has become the target of a takeover, and whose stock has now become a speculative issue.

In the box
Means that a dealer has a wire receipt for securities, indicating that effective delivery on them has been made.

In the hole
Used in the context of general equities. Below the inside market when one is attempting to sell the stock; at a significant discount. Antithesis of premium.

In the middle
Used in the context of general equities. At a price exactly in between the bid and offer prices.

In the tank
Used in the context of general equities. Slang expression meaning market prices are dropping rapidly.

In touch with
Used in the context of general equities. Having a sell inquiry in a stock (not a firm customer sell order), often entailing a capital commitment. Antithesis of looking for.

In-and-out trader
A daytrader, or a speculator who buys and sells the same security on the same day.

In-house
In the context of general equities, 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 is made to find a buyer to complete the transaction with the firm. Although a listed trade must be taken to the floor of the stock exchange, matching supply with demand within the confines of the firm results in higher commissions for the firm.

In-house processing float
The time it takes the receiver of a check to process a payment and deposit it in a bank for collection.

In-line
Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations.

In-service withdrawal
A participant-initiated withdrawal from an employer-sponsored retirement plan while the participant is still employed by the company.

In-substance defeasance
Process through which debt is removed from the balance sheet but not canceled.

In-the-money
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 $5.50 would be considered in the money by $0.50 an ounce. Related: Put. Antithesis of out-of-the-money.

In-the-money option
An option that has value.

Inactive asset
Asset not used in a productive manner at all times.

Inactive post
Trading post on NYSE floor where inactive, lightly traded stocks are traded in 10-share lots as opposed to 100-share lots.

Inactive stock/bond
A security that trades in very small volume on a daily basis. See:Illiquid.

Incentive fee
Compensation paid to commodities trading advisers or to any practitioner who achieves above-average returns. Sometimes called performance fee.

Incentive Stock Option (ISO)
An Option that has met certain tax requirements entitling the optionee to favorable tax treatment. Such an option is free from regular tax at the date of grant and the date of exercise (when a non-qualified option would become taxable). If two holding period tests are met (two years between grant date and sale date and one year between the exercise date and sale date), the profit on the option qualifies as a long term capital gain rather than ordinary income. If the holding periods are not met, there has been a "disqualifying disposition".

Incestuous share dealing
Trading of shares between companies in order to create a tax or financial benefit for the companies involved.

Incipient default
Potential default.

Income baskets
Category to which certain income is allocated. Losses in one basket may not be used to offset gains in another basket. Specified in U.S. tax code.

Income beneficiary
One who receives income from a trust.

Income bond
A bond whose payment of interest is contingent on sufficient earnings. These bonds are commonly used during the reorganization of a failed or failing business.

Income dividend
Any payout to mutual fund shareholders resulting from interest, dividends, or other income.

Income exclusion rule
The IRS rule that excludes certain types of income from taxation, e.g., welfare payments.

Income fund
A mutual fund that seeks to provide to liberal current income from investments.

Income immunization strategies
Methodologies adopted to insure adequate future cash flow.

Income investment company
A management company focused on managing a mutual fund whose primary purpose is income generation, typically investing in bonds and high dividend yielding stocks.

Income limited partnership
A limited partnership whose main goal is income generation, e.g., real estate, oil equipment.

Income property
Real estate purchased for the reasons of income generation.

Income risk
The possibility that a portfolio's dividends will decline as a result of falling interest rates. Income risk is generally greatest for money market instruments and short-term bonds, and least for long-term bonds.

Income statement (statement of operations)
A statement showing the revenues, expenses, and income (the difference between revenues and expenses) of a corporation over some period of time.

Income stock
Common stock with a high dividend yield and few profitable investment opportunities.

Income tax
A state or federal government's levy on individuals as personal income tax and on the earnings of corporations as corporate income tax.

Incontestability clause
Clause in a life insurance contract 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 important facts that the policyholder may have concealed, such as experiencing a stroke.

Inconvertibility
The inability of a local currency to be exchanged for another currency. Often includes transfer risk.

Incorporated joint venture
A joint venture in which the legal means of dividing the project's equity by shareholdings in a company.

Incorporation
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.

Incoterms
Trade terms used worldwide to specify seller and buyer obligations in shipments against international sales contracts. These terms are adopted by the International Chamber of Commerce (ICC) for international movement of merchandise. Since they in themselves are not law, they must be specified if desired in quotations, sales contracts, purchase orders and commercial invoices.

Incremental cash flows
Difference between the firm's cash flows with and without a project.

Incremental cost of capital
Average cost applicable to the issue of each additional unit of debt and equity.

Incremental costs and benefits
Costs and benefits that would occur if a particular course of action is taken, compared to those that would have obtained if that course of action had not been taken.

Incremental internal rate of return
Internal rate of return (I.R.R.) on the incremental investment from choosing a larger instead of a smaller project.

Indemnification
Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from lawsuits pertaining to their conduct.

Indemnify
Used in insurance policy agreements as to compensation for damage or loss. Hold harmless

Indemnity
A legal obligation to cover a liability, however arising.

Indenture
Agreement between lender and borrower that details specific terms of the bond issuance. Specifies legal obligations of bond issuer and rights of bondholders. An indenture spells out the specific terms of a bond, as well as the rights and responsibilities of both the issuer of the security and the holder.

Independent auditor
A certified public accountant operating outside the company who can provide an accountant's opinion.

Independent broker
NYSE member who executes orders for floor brokers and firms other than its own.

Independent investments
Investments available to a firm that may be selected individually or in groups because each investment is different in its nature and purpose.

Independent project
A project whose acceptance or rejection is independent of the acceptance or rejection of other projects.

Independent variable
Term used in regression analysis to represent the element or condition that is expected to influence another (so-called dependent) variable.

Index
Statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month. Indexes measure the ups and downs of stock, bond, and some commodities markets, in terms of market prices and weighting of companies in the index.

Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index products and options.

Index arbitrage
An investment trading strategy that exploits divergences between actual and theoretical futures prices. An example is the simultaneous buying (selling) of stock index futures (i.e., S&P 500) while selling (buying) the underlying stocks of that index, capturing as profit the temporarily inflated basis between these two baskets. Often, the point at which profitability exists is expressed at the block call as the number of points the future must be over or under the underlying basket for an arbitrage opportunity to exist. See: Program trading.

Index fund
Investment fund designed to match the 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 therefore mirrors the market as represented by that index.

Index futures
A futures contract on an index (such as a foreign stock index) in the futures market.

Index method
Technique to calculate rates of return that is based on initial and terminal values.

Index model
A model of stock returns using a market index such as the S&P 500 to represent common or systematic risk factors.

Index option
A call or put option based on a stock market index.

Index swap
A swap of a market index for some other asset, such as a stock-for-stock or debt-for-stock swap.

Index warrant
A stock index option issued by either a corporate or a sovereign entity as part of a security offering, and guaranteed by an option clearing corporation.

Indexed bond
Bond whose payments are linked to an index, e.g., the consumer price index.

Indexed rate
An interest rate linked to an index, usually the CPI.

Indexed Stock Options
Options that have an exercise price which may fluctuate above or below market value at performance options in that the exercise price of indexed options typically remains variable until the option is exercised.

Indexing
A passive instrument strategy calling for construction of a portfolio of stocks designed to track the total return performance of an index of stocks.

Indexing plus
See: Enhanced indexing

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 represented 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. See: Dividend yield.

Indication
(1) Notice given by a dealer (through Autex) or customer of an interest in buying or selling stock, sometimes including specific volume and price; (2) approximation of where a specialist sees buy and sell interest to tighten the range to an opening price.

Indication of interest
A dealer's or investor's interest in purchasing (not commitment to buy) securities that are still in the underwriting stage and are being registered by the Securities and Exchange Commission.

Indication pricing schedule
A statement of rates for an interest rate or currency swap.

Indicator
Used in the context of general equities. Technical or fundamental measurement that securities analysts use to forecast the market's direction, such as investment advisory sentiment, volume of stock trading, direction of interest rates, and buying or selling by corporate insiders.

Indifference curve
The expression in a graph of a utility function, where the horizontal axis measures risk and the vertical axis measures expected return. The curve connects all portfolios with the same utility.

Indirect Claim
Claim of a financial intermediary; the intermediary relends funds to the deficit unit to enable it to acquire real assets.

Indirect costs of financial distress
Costs such as lost business as a result of bankruptcy or liquidation.

Indirect diversification benefits
Diversification benefits provided by the multinational corporation that are not available to investors through their portfolio investment.

Indirect Exchange Rate
The foreign currency price of one unit of the home currency.

Indirect method
Reporting in the statement of cash flow that adjusts or reconciles net income to cash from operations.

Indirect quote
For foreign exchange, the number of units of a foreign currency needed to buy one US dollar.

Indirect terms
The price of a unit of domestic currency in foreign currency terms. See: Direct terms.

Individual Retirement Account (IRA)
A retirement account that may be established by an employed person. IRA contributions are tax deductible according to certain guidelines, and the gains in the account are tax-deferred.

Individual Retirement Account (IRA) rollover
A provision of the law governing IRA's that enables a retiree or anyone receiving a lump-sum payment from a pension, profit-sharing, or salary reduction plan to transfer the amount into an IRA.

Individual tax return
A tax return filed by an individual to account for their personal income and taxes payable.

Inductive reasoning
The attempt to use information about a specific situation to draw a conclusion.

Industrial production
A statistic determined by the Federal Reserve Board focusing on the total output of all US factories and mines on a monthly basis. Used as an economic indicator.

Industrial revenue bond (IRB)
A bond issued by local government agencies on behalf of corporations.

Industrials
General term used in the financial markets to refer to companies manufacturing, producing, or distributing goods and services.

Industry
The category describing a company's primary business activity. This category is usually determined by the largest portion of revenue.

Industry allocation
Investment of certain proportions of a portfolio in certain industries. Sometimes called sector allocation.

Inefficient portfolio
Group of assets dominated by at least one other portfolio under the mean variance rule. For example, if A has both lower return and higher volatility than B, we say A is dominated by B.

Infant industry argument
Argument that industries in the developing and emerging sectors of the economy need protection against international competition in order to establish themselves.

Inflation
The rate at which the general level of prices for goods and services is rising.

Inflation accounting
Accounting practices allowing for the effects of inflation.

Inflation hedge
Investments designed to hedge against inflation and the loss of purchasing power associated with it.

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.

Inflation uncertainty
The fact that future inflation rates are not known. It is a possible contributing factor to the makeup of the term structure of interest rates.

Inflation-escalator clause
A clause in a contract providing for increases or decreases in inflation depending on fluctuations in the cost of living, production costs, and so forth.

Inflation-indexed securities
Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity.

Inflexible expenses
Expenses that cannot be adjusted or eliminated such as car payments or rental payments. Antithesis of flexible expenses.

Information Agent
Agent whose primary task is to disseminate and explain the details of capital transactions.

Information asymmetry
Condition that information is known to some, but not all, participants.

Information Coefficient (IC)
The correlation between predicted and actual stock returns, sometimes used to measure the contribution 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 content effect
The rise in the stock price following a dividend signal, or publication of some other related news.

Information costs
Transactions costs that include the assessment of the investment merits of a financial asset. Related: Search costs.

Information memorandum
A document detailing the project and project financing, usually in connection with a syndication.

Information Ratio
The ratio of annualized expected residual return to residual risk. A central measurement for active management, value added is proportional to the square of the information ratio.

Information services
Organizations that furnish investment and other types of information, such as information that helps a firm monitor its cash position.

Information Signaling
Conveying intelligence through a firm's actions. A firm's dividend policy, for example, provides signals to investors concerning the value of the firm's stock.

Information-motivated trades
Trades in which an investor believes he or she possesses pertinent information not currently reflected in the stock's price.

Informational efficiency
The speed and accuracy with which prices reflect new information.

Informational efficiency
The degree to which market prices correctly and quickly reflect information and thus the true value of an underlying asset.

Informationless trades
Trades that are the result of either a reallocation of wealth or an implementation of an investment strategy that acts only on existing information. That is, an investor might sell a large block of stock -- not because they have information that leads them to think the stock will fall in value -- but because they might need the cash for some other investment.

Infrastructure
A country's fundamental system of transportation, communications, and other aspects of its physical capabilities.

Infrastructure risk
The risk associated with the impact on project cash flows from infrastructure problems. Also known as transportation risk.

Ingot
A bar of metal such as the type that the Federal Reserve System uses to store gold reserves.

Inheritance tax return
Tax form required to determine the amount of state tax due on an inheritance.

Initial filing
Has various meanings. It could refer to 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 repurchase. It could also refer to filings that occur before legal inside transactions.

Initial margin
(1) Amount of money deposited by both buyers and sellers of futures contracts to ensure performance of the terms of the contract; (2) amount of cash or eligible securities required to be deposited with a broker before engaging in margin transactions.

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.

Initial public offering (IPO)
A company's first sale of stock 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 considerable risks for the possibility of large gains. IPOs by investment companies (closed-end funds) usually include underwriting fees that represent a load to buyers.

Initial Public Offering Spinning
The practice of an investment bank setting aside portions of a corporation's Initial Public Offering for senior management of that corporation.

Initiate coverage
(1) Firm is now followed by analysts at a particular securities house; (2) Indication to cover short position by purchasing the underlying stock (this cancels out the short position).

Inland Bill of Lading
A document used as a receipt from the carrier to shipper that covers the transport of goods overland. It also acts as a contract of carriage.

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.

Inquiry
Used in the context of general equities. In-line expression of interest in a particular stock, usually asking the firm to bid for or offer stock.

INR
The ISO 4217 currency code for the Indian Rupee.

Inside market
Refers to over-the-counter trading. Best (highest) bid and best (lowest) offer, often used in the O.T.C. Market. See: In-line.

Insider Trading & Securities Fraud Enforcement Act of 1988 (ITSFEA)
Federal legislation that greatly increased the penalties for trading on material inside information.

Insider information
Material information about a company that has not yet been made public. It is illegal for