FINANCIAL DICTIONARY-I

A Nasdaq stock symbol specifying that it is the third preferred bond of the company.

IBD® 100 Index
The IBD 100, which runs every Monday in the IBD newspaper, is a computer-generated ranking of leading companies trading in the U.S. Rankings are based on a combination of each company's recent profit growth record; IBD's Composite Rating, which includes key measures such as return on equity, sales growth and profit margins; and relative price performance in the last 12 months. "Quarters of rising sponsorship" counts quarters in a row in which more mutual funds have purchased a company's shares than have sold shares. A company's inclusion in the list should not be viewed as a recommendation. Many are newer, smaller and highly volatile companies that require further research due to their speculative nature.

IBD® 85-85 Index
The 85-85 Index is a computer-generated stock list published in the IBD paper every Friday. The stock list is generated based on the following criteria: 1) price above $15; 2) stock price within 15% of its 52-week high; 3) EPS and relative strength rating of 85 or greater; 4) average daily trading volume of 10,000 shares or more. Thus the number of stocks in the list varies week-to-week according to the number of stocks that meet the list's criteria.

IBD® Big Cap 20
The IBD Big Cap 20 is a computer-generated ranking of the leading large-capitalization companies trading in the U.S. The list is featured in the IBD paper every Tuesday. Rankings are based on a combination of each company's profit growth; IBD's Composite Rating, which includes key measures such as return on equity, sales growth and profit margins; and relative price strength in the past 12 months. Some of the companies also appear on the IBD 100, which features a blend of small- mid- and large-cap names. For investors who prefer less volatile investments with greater liquidity, the Big Cap 20 offers more mature yet still vibrant enterprises. Companies must have a minimum market value of $15 billion and trade more than 300,000 shares a day.

IBD Charts
These price and volume charts are in color to help you more easily identify current base patterns and trends. Just right click on a chart to receive the daily price track box, which provides day’s high, low, last price and volume.

IBD® New America Index
The IBD New America Index tracks the stocks of all companies covered in "The New America" for six months. The stocks that comprise this index will change slightly each day, as we add to the index any new stocks covered in the current day's "The New America" section, and delete any stocks that we featured exactly six months ago.

IBD SmartSelect® Ratings
Six proprietary and exclusive research ratings designed to screen out deficient stocks, identity potential market leaders, save time, and significantly improve stock selection. They include:
· Earnings Per Share (EPS) Rating
· Relative Price Strength (RS) Rating
· Industry Group Relative Strength Rating
· Sales+Profit Margins+ROE (SMR) Rating
· Accumulation/Distribution Rating
· Composite Rating

IBD Stock Checkup®
IBD’s Stock Doctor diagnoses the overall strength of your stock after an expert examination of its technical and fundamental characteristics. Your diagnosis is based on fact of what works in the market. Stock Checkup also identifies how strong your company’s industry group is. You’ll also find out whether there are better stocks in the group you might want to consider. This is one Doctor’s appointment you can’t afford to miss.

Iceberg Order
A large single order that has been divided into smaller lots, usually by the use of an automated program, for the purpose of hiding the actual order quantity.

Ichimoku Chart
A chart that provides a glance at equilibrium prices for specified securities.

Identity Theft
The crime of obtaining the personal or financial information of another person for the purpose of assuming that person's name to make transactions or purchases.

Idiosyncratic Risk
Risk that affects a very small number of assets, and can be almost eliminated with diversification. Similar to unsystematic risk.

Idle Funds
Money that is not invested and, therefore, earning no income. For example, funds in a checking account.

Idle Time
Unproductive time spent by employees due to factors beyond their control.

IDR
In currencies, this is the abbreviation for the Indonesian Rupiah.

Illiquid
An asset or security that cannot be converted into cash very quickly (or near prevailing market prices).

ILS
In currencies, this is the abbreviation for the Israeli New Shekel.

Imbalance of Orders
A situation when too many orders of a particular type - either buy, sell or limit - for listed securities and not enough of the other, matching orders are received by an exchange. Also referred to as "order imbalance".

ImClone - IMCL
A publicly-traded biotechnology company marketing products in the field of oncology. The company made international headlines in 2002 after ImClone's founder and CEO Sam Waksal was indicted for attempting an insider trade of the company's stock. Shortly after Waksal's indictment, "domestic diva" Martha Stewart was also indicted for insider trading of the same stock. Stewart received information from Waksal and her own broker that Waksal had been trying to dump $5 million worth of his shares in the company on insider information, and she sold her shares on the knowledge that Waksal had tried to sell his.

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 use of a company's own resources, excluding cash.

Implied Rate
An interest rate that is determined by the difference between the spot rate and the forward/futures rate. The degree of relative costliness of a future rate can be assessed by comparing the implied rate with the spot rate.
Calculated as:

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.

Impulse Wave Pattern
In technical analysis, it is a term used in the Elliott Wave Theory to describe the strong move in a stock's price coinciding with the main direction of the underlying trend. These impulse waves are shown in the illustration below as wave 1, wave 3 and wave 5. Impulse waves also refer to the strong downward movements in a down trend.

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 a security within a short period of time, usually on the same day.

In Sight
A term describing deliverable grades of commodities underlying futures contracts that are held in 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
1. For a call option, when the option's strike price is below the market price of the underlying asset.
2. For a put option, when the strike price is above the market price of the underlying asset.

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 the Pink
An informal expression used to describe a situation in which an investor or an economy is in a good financial position. More generally, it refers to being in the best of health or condition.

In-Service Withdrawal
A withdrawal made from a plan account before the holder experiences a triggering event.

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.

Incentive Trust
A legally binding fiduciary relationship in which the trustee holds and manages the assets contributed to the trust by the grantor. In an incentive trust arrangement, the trustee must adhere to specific requirements set out by the grantor regarding what conditions the trust's beneficiaries must meet in order to receive funds from the trust.

Incidents Of Ownership
Any interests or rights that an individual maintains on an asset, including property and insurance, that allow the person to change, modify, use or benefit from the asset. This is important for determining estate taxes. An individual can reduce the size of his or her estate by gifting assets to beneficiaries but, to avoid estate tax on the gift, the original owner must not retain any incidents of ownership in the gifted assets.

Income
Money received by a person or organization because of effort (work) or from return on investments.

Income Bond
A type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments being paid only if the issuing company has enough earnings to pay for the coupon payment.

Income Deposit Security - IDS
A security that combines common stock and notes of the issuer to provide regular income payments to the holder of the security. The holder of the income deposit security receives dividends from the common stock, and fixed income from the debt instrument in the IDS.

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 Splitting
A tax reduction strategy employed by families living in areas that are subject to bracketed tax regulations. The goal of using an income-splitting strategy is to reduce the family's gross tax level, at the expense of some family members paying higher taxes than they otherwise would.

Income Spreading
A tax reduction strategy that is typically used by people with highly volatile incomes to reduce the overall marginal tax rate paid on a large sum of income. This strategy involves taking the particularly large source of income and dividing the amount realized over a period of years in order to reduce the overall amount of taxes paid.

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 Cash Flow
The additional operating cash flow that an organization receives from taking on a new project. A positive incremental cash flow means that the company's cash flow will increase with the acceptance of the project.

Incremental Cost
The encompassing change that a company experiences within its balance sheet due to one additional unit of production.

Also referred to as "marginal cost".

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 before repayment, amount of interest paid, if the bond is convertible (and if so, at what price or what ratio), if the bond is callable and the amount of money that is to be repaid.

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 change is more important than the actual numeric value. For example, knowing that a stock exchange is at, say, 5,000 doesn't tell you much. However, knowing that the index has risen 30% over the last year to 5,000 gives a much better demonstration of performance.
The plural of index can be 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 is 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. For each index there may be a different multiple for determining the price of the futures contract.

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.

Index Percentage
The weight an individual stock holds in an index, expressed as a percentage.

Index-Linked Bond
A bond in which payment of income on the principal is related to a specific price index, often the Consumer Price Index. This feature provides protection to investors by shielding them from changes in the underlying index. The bond's cash flows are adjusted to ensure that the holder of the bond receives a known real rate of return.
In Canada, they also referred to as "real return bonds".

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.

Indicative Quote
In forex trading, a currency quote that is provided by a market maker to a trading party but that is not firm. In other words, when a market maker provides an indicative quote to a trader, the market maker is not obligated to trade the given currency pair at the price or the quantity stated in the quote. Contrast this to a firm quote, in which a market maker guarantees a specified bid or ask price to a trader up to the maximum quantity specified in the quote.

Indicator
Statistics used to measure current conditions as well as to forecast financial or economic trends. Indicators are use extensively in technical analysis to predict changes in stock trends or price patterns. In fundamental analysis, economic indicators that quantify current economic and industry conditions are used to provide insight into the future profitability potential of public companies.

Indifference Curve
A diagram depicting equal levels of utility (satisfaction) for a consumer faced with various combinations of goods

Indirect Quote
A foreign exchange rate quoted as the foreign currency per unit of the domestic currency. In an indirect quote, the foreign currency is a variable amount and the domestic currency is fixed at one unit.

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 set 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.

Industrial Development Revenue Bonds - IDRBs
Municipal debt securities issued by a government agency on behalf of a private sector company and intended to build or acquire factories or other heavy equipment and tools.

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.

Industry Group
A William O’Neil + Company Inc. proprietary classification of stocks into 197 groups, based on a company's major source of revenue, competitors, products, markets served, etc.

Industry Group and Ticker Symbol Index
Published by Investor's Business Daily, this book lists the stocks in each of the 197 industry groups*, sorted three ways (by company name, ticker symbol, and industry group).

*The William O'Neil + Co. 197 Industry Groups is a Trademark owned by William O'Neil + Co., Inc. and is used by IBD under license agreement.

Industry Group Performance
This measures your stock’s industry group’s percentage change over the last four weeks, twelve months and year to date. 50%, for example, indicates the industry group as a whole has increased 50% in value within that time period.

Industry Group Rank
A proprietary number obtained by calculating the least-squares curve fit of summed prices on certain stocks within that industry. Another calculation is then done using all companies in the group. Separate weightings are used for different time periods. Groups are ranked from 1 (best) to 197.

Industry Group Relative Strength Letter Rating (Group RS)
A measurement of a stock's industry group performance over the past six months utilizing an A+ to E scale. All 197 groups are compared and distributed into 13 rating groupings: 12 of near equal size and one comprised of industry groups with "E" ratings. An "A+" rating indicates the best performing group; an "E" rating indicates the poorest price performing group.

Industry Group Relative Strength Numeric Rating (Group RS)
A percentile-based version of Industry Group Rank, a proprietary number obtained by calculating the least-squares curve fit of summed prices on certain stocks within that industry. Another calculation is then done using all companies in the group. Separate weightings are used for different time periods. Industry groups are ranked in value from 99 (highest) to 1 (lowest).

Inefficient Market
A theory which asserts that the market prices of common stocks and similar securities are not always accurately priced and tend to deviate from the true discounted value of their future cash flows. This theory opposes the efficient market hypothesis.
The phrase is also used to refer to a market which is not operating efficiently for example, it could be argued that the low-volume stocks traded over the counter comprise an inefficient market compared to blue chip stocks.

Inelastic
An economic term used to describe the situation in which the supply and demand for a good are unaffected when the price of that good or service changes.

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-Indexed Security
A security that guarantees a return higher than the rate of inflation if it is held to maturity.

Inflation-Linked Certificates of Deposit
Federally insured debt securities that are similar to regular certificates of deposit (CDs), but provide investors with inflationary protection via annually variable interest rates that increase or decrease with changes in the consumer price index, a measure of inflation.

Inflation-Linked Savings Bonds (I Bonds)
U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, as their yields are tied to the inflation rate.

Inflation-Protected Annuity - IPA
An annuity investment that guarantees a real rate of return at or above inflation. The real rate of return is the nominal return, less the inflation rate, thus protecting annuitants and beneficiary investors from inflation.

Inflation-Protected Security - IPS
A type of fixed-income investment that guarantees a real rate of return. The real rate of return is the nominal return, less the inflation rate, thus protecting investors from inflation.

Inflationary Psychology
The relationship between inflation and individuals' behavior.

Inflationary Risk
The uncertainty over the future real value (after inflation) of your investment.

Inflection Point
An event that changes the way we think and act.
-Andy Grove, Founder of Intel.

Information Circular
A document sent to shareholders outlining important matters to be discussed at the annual shareholders' meeting.

Information Ratio
A measure of portfolio management's performance against risk and return relative to a benchmark or alternative measure.

Infrastructure
The basic physical systems of a business or nation

Ingot
Gold in bar form.

Inheritance
All or part of a person's estate/assets that is given to an heir once the person is deceased.

Inheritance Tax
In some states in the U.S. (and in the United Kingdom), a tax imposed on those who inherit assets from a deceased person. The tax rate for inheritance taxes depends on the value of the property received by the heir or beneficiary and his/her relationship to the decedent.
Inheritance tax is known in some countries as a "death duty" and is occasionally called "the last twist of the taxman's knife".

Initial Claims
A measurement of the number of jobless claims filed by individuals seeking to receive state jobless benefits. This number is watched closely by financial analysts because it provides insight into the direction of the economy. Higher initial claims positively correlate with a weakening economy, and vice versa for lower initial claims.

Initial Margin
The percentage of the purchase price of securities (that can be purchased on margin) that the investor must pay for with his or her own cash or marginable securities.
Also called the "initital margin requirement".

Initial Public Offering - IPO
The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.
Also referred to as a "public offering".

INR
In currencies, this is the abbreviation for the Indian Rupee.

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 knowledge of, or 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.

Inspectorial Powers
A state administrator's or other regulatory entity's power to initiate investigations to determine whether provisions of the Uniform Securities Act have been violated or are about to be violated.

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.

Installment Receipt
A debt or equity issuance in which the purchaser does not pay the full value of the issue up front. In the purchase of an installment receipt, an initial payment is made to the issuer at the time the issue closes the remaining balance must be paid in installments, usually within a two-year period . Although the purchaser has not paid the full value of the issue, he or she is still entitled to full voting rights and dividends.

Instinet
An electronic securities order-matching (trading) and information system that allows members (primarily professional traders and investors) to display bid and offer quotes for stocks, and to transact between themselves using brokers. As a global securities broker, Instinet enables over 1,500 institutional customers to trade securities in over 40 global markets.

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.

Institutional Investors
Mutual funds, banks, pension funds, insurance companies, etc. engaged in investing. They are responsible for most of the trading that occurs in the market, and their impact on both an individual stock's price movement as well as the movement of the general market is tremendous

Institutional Sponsorship (or Sponsorship)
Refers to the shares of a company owned by an institution. The largest sources of demand for stocks are mutual funds and other institutional buyers;

Insurance
A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.

Insurance Score
A rating computed and used by insurance companies that represents the probability of a client filing an insurance claim during his or her coverage. The score is based on the client's credit rating and will impact the premiums he or she pays for the insurance coverage - a higher score will result in lower premiums, and vice versa.

Intangible Asset
An asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset. A company brand name is considered to be an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company enters a legal agreement to operate under another company's patent, with no plans of extending the agreement, it would have a limited life and would be classified as a definite asset.

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.

Interbank Market
The financial system and trading of currencies among banks and financial institutions, excluding retail investors and smaller trading parties. While some interbank trading is performed by banks on behalf of large customers, most interbank trading takes place from the banks' own accounts.

Interbank Rate
The rate of interest charged on short-term loans made between banks. Banks borrow and lend money in the interbank market in order to manage liquidity and meet the requirements placed on them. The interest rate charged depends on the availability of money in the market, on prevailing rates and on the specific terms of the contract, such as term length.

Intercommodity Spread
Going long on one futures market in a given delivery month and simultaneously going short on the same commodity and delivery month but a different futures market but with similar underlying asset.
Interdealer Quotation System
The exchange system comprised of the Nasdaq (National Association of Securities Dealers Automatic Quotation), Nasdaq small-cap market and the Over-the-Counter Bulletin Board (OTCBB) exchange platforms.

Interdelivery Spread
Simultaneously entering a long and short on the same futures contract but with different delivery months in the hopes that the price difference between the two months widens or narrows, depending on the underlying investment.

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.

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.

Interest Rate Floor
An over-the-counter investment instrument that protects the floor buyer from losses resulting from a decrease in interest rates. The floor seller compensates the buyer with a payoff when the reference interest rate falls below the floor's strike rate.

Interest Rate Options
An investment tool whose payoff depends on the future level of interest rates. Interest rate options are both exchange traded and over-the-counter instruments.

Interest Rate Options
An investment tool whose payoff depends on the future level of interest rates. Interest rate options are both exchange traded and over-the-counter instruments.

Interest Rate Parity
A theory that the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. Interest rate parity plays an essential role in foreign exchange markets, connecting interest rates, spot exchange rates and foreign exchange rates.

Interest Rate Risk
The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship. Such changes usually affect securities inversely and can be reduced by diversifying (investing in fixed-income securities with different durations) or hedging (e.g. through an interest rate swap).

Interest Rate Swap
An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for another based on a specified principal amount. Interest rate swaps often exchange a fixed payment for a floating payment that is linked to an interest rate (most often the LIBOR). A company will typically use interest rate swaps to limit, or manage, its exposure to fluctuations in interest rates, or to obtain a marginally lower interest rate than it would have been able to get without the swap.

Interest Sensitive Stock
Any stock whose price is extremely sensitive to changes in interest rates.

Interested Shareholder
A shareholder or association with beneficial ownership, whether direct or indirect, of enough voting stock to affect company decisions

Interim Dividend
A dividend payment made before a company's AGM and final financial statements. This declared dividend usually accompanies the company's interim financial statements.

Intermarket Sector Spread
The yield spread between two fixed-income securities in different sectors with the same maturity.

Intermarket Spread
The simultaneous purchase of a given delivery month of a futures contract on one exchange, and the simultaneous sale of the same delivery month of the same futures contract on another exchange in the hope the sale price is greater than the purchase price.

Intermarket Spread Swap
A swap transaction meant to capitalize on a yield discrepancy between bond market sectors.

Internal Audit
An audit performed by a person (or persons) employed by the firm being audited.

Internal Growth Rate
The highest level of growth achievable for a business without obtaining outside financing.

Internal Rate Of Return - IRR
Often used in capital budgeting, it's the interest rate that makes net present value of all cash flow equal zero.

Internal Revenue Service - IRS
A United States government agency established in 1862 by President Lincoln. The IRS is responsible for the collection and enforcement of tax collection and operates under the authority of the United States Department of the Treasury. It is primarily engaged in the collection of individual income taxes and employment taxes, but also handles corporate, gift, excise and estate taxes.
The IRS is sometimes referred to as the "taxman".

Internalization
A decision by a brokerage to fill an order with the firm's own inventory of stock.

International Accounting Standards - IAS
An older set of standards stating how particular types of transactions and other events should be reflected in financial statements. In the past, international accounting standards (IAS) were issued by the Board of the International Accounting Standards Committee (IASC).
Since 2001, the new set of standards has been known as the international financial reporting standards (IFRS) and has been issued by the International Accounting Standards Board (IASB).

International Association of Financial Engineers - IAFE
An organization comprised of scholars and specialists from various areas of financial concern.

International Bank Account Number - IBAN
A standard numbering system developed to identify bank accounts from around the world. It was originally developed by banks in Europe to simplify transactions involving bank accounts from other countries.

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 Equity Style Box
A nine-box matrix that displays the characteristics of international stock funds. On the horizontal axis, funds are separated into one of three categories - either value, blend or growth. On the vertical axis, funds are separated into one of three categories - small, medium or large market capitalization.

International Financial Reporting Standards - IFRS
A set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board.
IFRS are sometimes confused with International Accounting Standards (IAS), which are the older standards that IFRS replaced. (IAS were issued from 1973 to 2000.)

International Fisher Effect - IFE
An economic theory that states that an expected change in the current exchange rate between any two currencies is approximately equivalent to the difference between the two countries' nominal interest rates for that time.
Calculated as:
Where:
"E" represents the % change in the exchange rate
"i

International Fund
A mutual fund that can invest in companies located anywhere outside of your own country.

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 Monetary Market - IMM
A division of the Chicago Mercantile Exchange (CME) that deals with the trading of currency and interest rate futures and options. Trading on the IMM started in May 1972 when the CME and the IMM merged.

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)

International Swaps and Derivatives Association - ISDA
An association created by the private negotiated derivatives market that represents participating parties. This association helps to improve the private negotiated derivatives market by identifying and reducing risks in the market.

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.

Intertemporal Choice
An economic term describing how an individual's current decisions affect what options become available in the future. Theoretically, by not consuming today, consumption levels could increases significantly in the future, and vice versa.

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.

Intestate
The act of dying without a legal will. Determining the distribution of the deceased's assets then becomes the responsibility of a probate court.

Intraday
Another way of saying "within the day". Intraday price movements are particularly important to short-term traders looking to make many trades over the course of a single trading session. The term intraday is occasionally used to describe securities that trade on the markets during regular business hours, such as stocks and ETFs, as opposed to mutual funds, which must be bought from a dealer.

Intraday High and Low Price
This represents a day's price action in terms of three variables. The top of the bar signifies the highest price the stock traded for the day: this is the intra-day high price. The bottom of the bar marks the low price of the day: this is the intra-day low price. The horizontal intersecting slash shows where the stock closed for 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.

Intrastate Offering
In the United States, a securities offering that can only be purchased in the state in which it is being issued. Because the offering does not include more than one state, it does not fall under the jurisdiction of the Securities and Exchange Commission and therefore does not need to be registered with the SEC. The offering does, however, fall under the jurisdiction of state regulators.

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 Accounting
The body of accounting that deals with valuing and accounting for changes in inventoried assets. Changes in value can occur for a number of reasons including depreciation, deterioration, obsolescence, change in customer taste, increased demand, decreased market supply and so on.

Inventory Reserve
An accounting entry that represents a deduction from earnings for the purpose of fairly and reasonably representing the value of inventoried assets on a balance sheet. The inventory reserve is used to make up for the fact that all inventory will not be sold at the cost to the firm.

Inventory Turnover
A ratio showing how many times a company's inventory is sold and replaced over a period.

Inverse Floater
A bond or other type of debt whose coupon rate has an inverse relationship 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. An inverse saucer is characterized by a steady flattening of the uptrend to such a degree that the market at one moment enters a sideways range, but then slowly starts to fall slowly and finally accelerates downward. This rare formation provides no clear price target but usually implies quite a lot of potential since 50% or more retracement of the preceding uptrend can be expected. Also known as "rounded top".

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 Spread
A situation in which the yield difference between a longer term financial instrument and a shorter term instrument is negative. This is calculated by subtracting the longer term by the shorter term. In effect, the shorter term instrument is yielding a higher rate of return than the longer term instrument. This is in contrast to what is considered a normal market, where longer term instruments should yield higher returns to compensate for time.

Inverted Yield Curve
An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.
Partial inversion occurs when only some of the short-term Treasuries (five or 10 years) have higher yields than the 30-year Treasuries do. An inverted yield curve 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.

Investing Sage
An investor who is seen to be extremely knowledgeable about the markets, and to have much experience at making successful investments. These investors are widely known to the investing public and generate double-digit returns.

Investment
An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.

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.
Also referred to as a "financial advisor".

Investment Advisor's Act of 1940
The federal law enforced and interpreted by the Securities and Exchange Commission (SEC) that governs investment advisors.

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 people who pool their money to make investments. Usually, investment clubs are organized as partnerships and after the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings may be educational and each member may actively participate in investment decisions.

Investment Company
A corporation or trust engaged in the business of investing the pooled capital of shareholders in the financial instruments of other companies. This is most often done either through a closed-end fund or an open-end fund (also referred to as a "mutual fund"). In the U.S., most investment companies are registered with and regulated by the Securities & Exchange Commission under the Investment Company Act of 1940.

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 Consultant
An advisor who helps investors with their long-term investment planning. An investment consultant, unlike a broker, does more in-depth work on formulating clients' investment strategies, helping them fulfill their needs and goals.

Investment Consultant
An advisor who helps investors with their long-term investment planning. An investment consultant, unlike a broker, does more in-depth work on formulating clients' investment strategies, helping them fulfill their needs and goals.

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 Income
Income coming from interest payments, dividends, capital gains collected upon the sale of a security or other assets, and any other profit that is made through an investment vehicle of any kind.

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 or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence, while the others are used to generate rental income and profits through price appreciation. The tax implications for investment real estate are often different than those for residential real estate.

Investment Strategy
An investor's plan of attack to guide their investment decisions based on individual goals, risk tolerance and future needs for capital. The components of most investment strategies include asset allocation, buy and sell guidelines, and risk guidelines.

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 company's affairs. This helps investors to make informed buy or sell decisions.

Investor's Business Daily
A time-saving research tool utilizing computerized data to help people make smarter investing decisions. The proprietary information is the result of a comprehensive '45-Year Study of the Greatest Stock Market Winners.' Investor's Business Daily also provides educational and motivational features to help individuals in their career and personal life.

Investor's Business Daily Guide To the Markets
Five proprietary and exclusive research ratings designed to screen out deficient stocks, identity potential market leaders, save time, and significantly improve stock selection. They include:
1.Earnings Per Share (EPS) Rating
2.Relative Price Strength (RS) Rating
3.Industry Group Relative Strength Rating
4.Sales+Profit Margins+ROE (SMR) Rating
5.Accumulation/Distribution Rating

Invisible Hand
A term coined by economist 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."
Thus, the 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.

Involuntary Cash-Out
Distributing the balance of a participant's retirement account under a qualified plan without the written consent of the participant, the participant's spouse or beneficiary.

IOU
An abbreviation of the phrase "I owe you."

IPO Date
The Initial Public Offering date is the day a stock first traded shares on the AMEX, NASDAQ or NYSE exchange. It is presented in the format of Month/Day/Year.
The IPO Date is available for stocks whose initial public offering was held in 1971 or later. This data item is not presented for stocks that traded before 1971, were spin-offs from another publicly traded stock, switched to a major exchange from the Bulletin Board or Over-the-Counter exchanges, or for stocks that traded in foreign markets prior to their listing with the U.S. exchanges.

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.

Iron Butterfly
An options strategy that is created with four options at three consecutively higher strike prices. The two options located at the middle strike create a long or short straddle (one call and one put with the same strike price and expiration date) depending on whether the options are being bought or sold. The "wings" (options at the higher and lower strike prices) of the strategy are created by the purchase or sale of a strangle (one call and one put at different strike prices but the same expiration date). This strategy differs from the butterfly spread because it uses both calls and puts, as opposed to all calls or all puts.

Iron Condor
An advanced options strategy that involves buying and holding four different options with different strike prices. The iron condor is constructed by holding a long and short position in two different strangle strategies. A strangle is created by buying or selling a call option and a put option with different strike prices, but the same expiration date. The potential for profit or loss is limited in this strategy because an offsetting strangle is positioned around the two options that make up the strangle at the middle strike prices.

IRR
In currencies, this is the abbreviation for the Iranian Rial.

Irrational Exuberance
An infamous phrase uttered by Alan Greenspan in 1996 to describe the overvalued market at the time.

Irrelevant Cost
A managerial accounting term that represents a cost, either positive or negative, that does not relate to a situation requiring management's decision.
Irrevocable Beneficiary
A beneficiary in a life insurance policy or segregated fund contract whose compensation cannot be changed without his or her consent.

Irrevocable Letter Of Credit - ILOC
A letter of credit that can't be canceled. This guarantees that a buyer's payment to a seller will be received on time and for the correct amount.

Irrevocable Trust
A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets into the trust, effectively removes all of his or her rights of ownership to the assets and the trust.
This is the opposite of a "revocable trust", which allows the grantor to modify the trust.

iShares
Index funds that trade like stocks on stock markets. Each share represents a proportion of ownership in each stock that makes up an index.

ISK
In currencies, this is the abbreviation for the Iceland Krona.

Islamic Banking
A banking system that is based on the principles of Islamic law (also known as Sharia, or Shariah) and guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest. Collecting interest is not permitted under Islamic law.

Island Reversal
An occurrence in technical analysis where a stock price will gap up/down, trade higher than this price, and then gap down/up below the initial price.

ISO Currency Code
The internationally standardized three-letter abbreviation for a country's currency.

Isoquant Curve
A graph of all possible combinations of inputs that result in the production of a given level of output. Used in the study of microeconomics to measure the influence of inputs on the level of production or output that can be achieved.

Issued Shares
The amount of authorized shares that are sold to and held by the shareholders of a company.Also known as "issued stock".

Issuer
A legal entity that develops, registers and sells securities for the purpose of financing its operations. Issuers may be domestic or foreign governments, corporations or investment trusts. Issuers are legally responsible for the obligations of the issue and for reporting financial conditions, material developments and any other operational activities as required by the regulations of their jurisdictions. The most common types of securities issued are common and preferred stocks, bonds, notes, debentures, bills and derivatives.

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.

Itemized Deduction
A deduction from a taxpayer's taxable adjusted gross income that is made up of deductions for money spent on certain goods and services throughout the year. The specific deductions that are allowed are outlined by the IRS and include such expenses as mortgage interest, state and local taxes, gifts, and medical expenses.