I - Return to Index
I/B/E/S or IBES or I.B.E.S. - Refers to Institutional Brokers Estimate System.
IB - Is an Introducing Broker. Depending on the financials and election, Introducing Brokers can be effectively self-guaranteeing or Guaranteed by the Clearing Firm with which they are affiliated.
ICONS - Are Index Currency Option Notes.
IFA - Is an Independent Financial Advisor.
iFM™ or IFM™ - Refers to Internet Fund Manager. This is a software system created by OASIS™ for the development of financial internet sites. It provides methods to create online financial tables, indices, portfolios and more.
IGARCH - Is Integrated Generalized Autoregressive Conditional Heteroskedasticity (GARCH).
IMF - Is the International Monetary Fund.
Immediate or Cancel - Is a variation of the All or None (AON) order. Here, an attempt is made to satisfy as much of the order as possible. What is not immediately filled is canceled. Therefore, partial fills are possible with this type of order.
Implicit Option - See Embedded Option.
Implied Price - Is the price computed by a model which considers a comparable benchmark, volatility, and spread adjustment. It is used in the absence of a current market price.
Implied Repo Rate - Is influenced by the cost of funds, tax rates, deductibility of carry charges, yields, the time to expiration and organizational constraints. It indicates the implied rate of return for specified investments. While many quote services list an assumed or benchmark Implied Repo Rate, there are many because each investor has his or her own schedule of financing costs and investment opportunities.
Implied Volatility - Is the current volatility or the level of volatility required to generate an option premium given a known market price for the underlying, an interest rate, an expiration date and a strike price.
Income Bonds - Refer to securities which promise to repay the principal when due. However, these bonds differ from other bonds in that they promise to pay interest only when it is earned. This type of bond is verisimilar to many kinds of preferred stock. However, an advantage can be the tax deductibility of the interest charge when paid versus a preferred dividend payment. These bonds are sometimes known as Adjustment Bonds. The quality of these bonds generally is not as good as investment grade issues because there is an additional contingency on the payment of interest.
Independence - Is a very important concept in probability and statistics. When the occurrence or nonoccurrence of an event has no impact or statistical influence on another event then the events are said to be independent of one another. When stock market or other asset returns are substituted for events, these observations are assumed to be independent. This assumption simplifies the mathematics of many pricing and portfolio models. However, it may be inaccurate, particularly during periods of high or increasing volatility. While the majority of observations may fall within the defined assumption, the occurrence of big change days has been demonstrated to occur more frequently than normally expected. Moreover, these relatively large price or rate changes tend to cluster within relatively narrow time frames.As a quick illustration, if a three standard deviation event is normally expected to occur once every 40 years or 10,000 trading days then the likelihood of two such events in a short time frame is expected to be 1 in 100,000,000 (10,000 x 10,000). This clearly has not been the case. It is critical to take into account the statistical interdependence for Value at Risk Programs, hedging, and derivative pricing models.
Index Funds - Are investment vehicles such as mutual funds which are based on a specified benchmark or index. Among the more popular indices are: S&P 500, S&P 100, EAFE, targeted average maturity dates, and various bond indices such as the Lehman Aggregate Bond Index.
Indication of Interest - Occurs when a client states his or her interest in purchasing a new issue before its effective date. This interest is non-binding.
Inelastic - Refers to the economic concept of the inability to quickly adjust supply or demand despite changes in market conditions.
Initial Margin - Is the amount of funds and/or securities required to establish a position.
Initial Public Offering - Is the initial offering to the public of a companyís securities. After the initial offering, the securities are said to trade in the secondary market.
Insider Information - Is important knowledge about a company's affairs which has not been made public. It is illegal to trade on such information in a number of countries including the United States. Often this information by nature is only viewed by senior officials or those working closely with executives.
Intangible Assets - Refer to items such as goodwill or intellectual properties. Among the latter are copyrights, patents, and trademarks.
Intellectual Property - Are assets such as: copyrights, trademarks, and patents. Logos or special colors may also be intellectual properties.
Interest - Is either the interest rate or the income from a credit instrument.
Interest Calculations and Related Formulas - Are quite varied yet interrelated. Some of the standard computations are:
Interest Compounded Annually - Is calculated by the following formula:
Amount = (1 + interest rate)twhere i is the interest rate and t is expressed decimally (.05 for 5 percent). Also, t is the time and .5 refers to 1/2 of a year, 2 equals 2 years and 7.75 equals 7 3/4 years.
Interest Compounded Continuously - Is calculated by the following formula:
Amount = eitwhere e is equal to 2.7183, i is the interest rate and t is expressed decimally (.05 for 5 percent). Also, t is the time and .5 refers to 1/2 of a year, 2 equals 2 years and 7.75 equals 7 3/4 years.
Interest Discounted Annually (Present Value of Reversion) - Is calculated by the following formula:
Amount = (1 + interest rate)-t or, Amount = ____1_____ ( 1 + i)twhere i is the interest rate and t is expressed decimally (.05 for 5 percent). Also, t is the time and .5 refers to 1/2 of a year, 2 equals 2 years and 7.75 equals 7 3/4 years.
Interest Discounted Continuously - Is calculated by the following formula:
Amount = e-itwhere e is equal to 2.7183, i is the interest rate and t is expressed decimally (.05 for 5 percent). Also, t is the time and .5 refers to 1/2 of a year, 2 equals 2 years and 7.75 equals 7 3/4 years.
Interest Impact on Accumulation of 1 Per Period - Is calculated by the following formula:Amount = [(1+i)t-1]/i where i is the interest rate and t is expressed decimally (.05 for 5 percent). Also, t is the time and .5 refers to 1/2 of a year, 2 equals 2 years and 7.75 equals 7 3/4 years.
Interest Impact on Instalment to Amortize or Amortization - Is calculated by the following formula:
Amount = ________i________ [ 1 - (1/1+i)t ]where i is the interest rate and t is expressed decimally (.05 for 5 percent). Also, t is the time and .5 refers to 1/2 of a year, 2 equals 2 years and 7.75 equals 7 3/4 years.
Interest Impact on Present Value of Ordinary Annuity of 1 Per Period - Is calculated by the following formula:
Amount = 1 - [1/(1+i)t] iwhere i is the interest rate and t is expressed decimally (.05 for 5 percent). Also, t is the time and .5 refers to 1/2 of a year, 2 equals 2 years and 7.75 equals 7 3/4 years.
Interest Impact on Sinking Fund Factor - Is calculated by the following formula:
Amount = _____i____ z(1+i)t-1where i is the interest rate and t is expressed decimally (.05 for 5 percent). Also, t is the time and .5 refers to 1/2 of a year, 2 equals 2 years and 7.75 equals 7 3/4 years.
Interest Only - Is a security whose value is predicated on a discounted interest rate structure. Typically, this is a CMO type derivative product. Prepayment activity is a dominant evaluation factor.
Interest Rate - Is either the coupon or floating rate attached to a credit instrument or lending operation.
Interest Rate Risk - Is the risk associated with changes in general interest rate levels or yield curves. This compares to Prepayment Risk.
Interest Rate Swap - Is the contract whereby one party typically agrees to exchange a floating rate for a fixed coupon rate. There are many variations to this theme. Some of these other swaps can be cross border, fixed-for-fixed, or floating-for-floating. The common denominator to these transactions is the swapping of cashflows and not principal amounts. There are predetermined periodic adjustments in cash flow payments.
Intermarket Trading System - Is the network which links the trading floors of several registered exchanges. It encourages competition in issues listed on the American or New York Stock Exchanges with the other participating regional exchanges. The competitive edge occurs if there is a better price out in the network than on a particular exchange. If so, then a broker or market maker can execute at that better price.
Intermediate Corporate Bonds - Are investment grade notes and bonds issued by corporations. The maturities range between 1 to 10 years. These securities encompass banks, other financial institutions, and industrial issuers.
Intervention - Is the action taken by a monetary authority, government, or agency to influence prices, currency rates, capital flows, liquidity, or interest rates.
Intrinsic Value - Is the amount that an option is in-the-money.
Inventory - Is the firmís position with the intent of quick resell or repurchase. Can refer to the open positions taken in the course of market making activities. This is opposed the Investment Account.
Inventory Turnover Ratio - Is computed by dividing annual sales by inventories. It is usually desireable to have a relatively high inventory turnover ratio relative to competitors.
Inverse Floater - Is an instrument which the required interest payment, or coupon, will change inversely to rates prevailing at the time of the reset.
Inverted Market - Is the market condition whereby the deferred or more forward delivery months are at a progressive discount to the spot or nearby month. This condition is marked by premiums for immediate or nearby deliveries. This is also known as a backwardation market. This is opposite to a contango or carrying charge market.
Inverted Yield Curve - Is the market condition whereby the near-term interest rates are higher than long-term interest rates. For example, the two year rate is greater than the ten year rate; or, the spot (overnight) rate is higher than the thirty year rate.
This inversion may be induced or result from changes in monetary policy, foreign exchange movements, immediate liquidity needs within the financial system, constrictions in money/credit and other financial forces.
Investment Account - Is an account at a financial institution which is held for long term investment or capital purposes. This is opposed to the trading or inventory account.
Investment Horizon - Is the actual or expected period that a financial position will be held. Some organizations and individuals use simple purchase-and-hold strategies, particularly for fixed income securities. For those parties, the investment horizon would be the time left to maturity. Other uses of the term are: day, short-term, intermediate- term, and long-term holdings.
Invisible Supply - Refers to uncounted or unverified, but known to exist, inventories of a commodity.
IO - See Interest Only.
IO-ette or IOette - Is a security similar to an Interest Only (IO) tranche but includes a modest amount of principal.
IOC - See Immediate or Cancel.
IPE - Is the International Petroleum Exchange.
IPO - See Initial Public Offering.
IPO Date - Is the date that a security began to trade publicly.
IRA - Is the Individual Retirement Account. It provides a tax-advantaged investment vehicle for individuals to save for retirement. The popularity of the program has lead to variations of this plan. These include the College IRA and the Roth IRA.
IRR - Is used two different ways. For the first, it refers to the Internal Rate of Return. For the second, it refers to Implied Repo Rate.
ISCC - Is the International Securities Clearing Corporation.
ISDA - Is the International Swaps Dealer Association.
ISFDS - Are Indexed Sinking Fund Debentures.
ISID - Is the International Securities Identification Directory.
ISIN - Is the International Securities Identification Number.
Issued Shares - Are the number of shares held by parties other than the corporation. Issued shares are equal to or less than the authorized share amount. See Authorized Shares and Treasury Stock for related terms.
ITS - See Intermarket Trading System.
| OASIS® Home |