Business Glossary: I

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

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

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.

ILS The ISO 4217 currency code for the Israeli Shekel.

IMF See: International Monetary Fund

IMM See: International Monetary Market

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

INR The ISO 4217 currency code for the Indian Rupee.

IO The two-character ISO 3166 country code for BRITISH INDIAN OCEAN TERRITORY .

IO See: Interest-only strip

IOC order See: Immediate or canceled order

IOM See: Index and Option Market

IPL See: Investment Product Line

IPO See: Initial Public Offering

IQ The two-character ISO 3166 country code for IRAQ.

IQD The ISO 4217 currency code for the Iraqi Dinar.

IR The two-character ISO 3166 country code for IRAN, ISLAMIC REPUBLIC OF.

IRB See: Industrial Revenue Bond

IRR The ISO 4217 currency code for the Iranian Rial.

IRR See: Internal rate of return

IS The two-character ISO 3166 country code for ICELAND.

ISDA See: International Swap Dealers Association

ISK The ISO 4217 currency code for the Icelandic Krona.

ISMA See: International Security Market Association

ISO See: International Organization for Standardization.

IT The two-character ISO 3166 country code for ITALY.

ITL The ISO 4217 currency code for the Italian Lira.

ITM See: In-the-money

ITS See: Intermarket Trading System

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

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

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.

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

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.

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.

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

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.

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

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

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 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-money option An option that has value.

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

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

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.

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.

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.

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.