Financial Glossary


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Illiquid Investment. Any investment that may be difficult to sell quickly at a price close to its market value. Examples include commercial real estate and limited partnerships.

In Play. A situation where the acquisition of a company is being actively pursued by one or more entities.

Income. Cash received. Sources include employment, business, rent collected, investments and pension. In short, money received by a person or organization because of effort (work) or from return on investments.

Income and Expense Statement (Cash Flow). A financial statement depicting and comparing an individual's income and expenses, resulting in either a surplus or a shortfall over a stated time period.

Income Deferral. Postponing the taxation of income until a point in the future.

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

Income Stocks. Stocks of stable companies, that have a low to moderate risk and represent relatively conservative investments. If you want to invest for both growth and current income, buy income stocks because of their potential for regular dividend payments. Income stocks tend to be in stable service industries, such as telecommunications and utilities that can offer both higher-than-average dividend payments and the possibility of capital appreciation.

Incubator. An entity designed to nurture business concepts or new technologies to the point that they become attractive to venture capitalists. An incubator typically provides both physical space and some or all of the services – legal, managerial, technical – needed for a business concept to be developed. Incubators often are backed by venture firms, which use them to generate early-stage investment opportunities.

Indexing. The act of increasing a payment by a predetermined amount at predetermined intervals.

Index Fund. A mutual fund that matches its portfolio to that of a specific financial market index, with the objective of duplicating the general performance of the market in which it invests.

Inflation. The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Initial Public Offering (IPO). Also known as "IPO." When a private company "goes public," it offers shares on the market for the first time in an initial public offering. In other words, The initial offering of a company's securities to the public based on a registration statement filed with the SEC. A company's first offering of common stock to the public.

Insider. All directors and senior officers of a corporation and those who may also be presumed to have access to inside information concerning the company; also anyone owning more than 10 per cent of the voting shares in a corporation.

Insider Report. A filed report of all transactions in the shares of a company by those considered to be insiders of the company. Each is to be filed to applicable securities commissions by the tenth day of the month following the transaction, although in practice many insiders file much later without any action taken by regulators.

Instrument. A document laying out some legal right or obligation. e.g. share certificate, coupon, agreements and contracts.

Intellectual Property. Certain intangible assets such as, patents, trademarks, and copyrights.

Interest. The payments that a borrower is obligated to pay to the lender for the use of the a fixed sum of money.

Intermediary. An agent who is engaged to negotiate matters between two parties, also called a Business Broker.

Internal Rate of Return (IRR). The growth rate of your money over a time period relative to the amount invested. IRR, which compares the profit to the amount invested, is expressed as a percent gain or loss for easy comparison with other percent changes for the same time period. The IRR calculation is based on continuous compounding. Put another way, the IRR is often used in capital budgeting, it's the interest rate that makes net present value of all cash flow equal zero. Essentially, IRR is the return that a company would earn if they expanded or invested in themselves, rather than investing that money abroad.

Internal Rate of Return (IRR) Annualized. This is the IRR expressed as an interest rate for easy comparison with other interest rates for the same time period.

International Monetary Fund (IMF). An agency of the United Nations, established in 1944 along with the World Bank to promote post-war economic recovery, development and trade -- principally by helping to ensure a stable system of international exchange. The IMF has evolved since its inception, but remains focused on overseeing the international monetary system, including balance of payments stability (e.g., the resolution of debt problems) and encouraging member governments to implement appropriate macro-economic and structural policies.

Investment Tax Credit. A tax credit available for investments in scientific research and experimental development and in certain regions.

In-the-Money. A call option is in-the-money if its strike price is below the current market price of the underlying security. A put option is in-the-money if its strike price is above the current market price of the underlying security. The in-the-money amount is the option's intrinsic value.

Intrinsic Value. The amount by which the price of a warrant or call option exceeds the price at which the warrant or option may be exercised.

Inventory. Finished or near-finished products that a company has not yet sold. It's considered an asset because it can be sold or liquidated for money. But, from an investor's point of view, inventory is often more like a liability because it represents a momentary failure on the company's part to convert its business into cash. Investors ideally like to see inventory growth comparable to, or less than, sales growth.

Inventory Profits. Profits generated as a result of inflation, in which old inventory is sold at a profit because of increasing prices. This is more likely to occur when a company is using FIFO rather than LIFO.

Investment. The use of money for the purposes of making more money, to gain income, increase capital or both.

Investment Adviser. Investment counsel to a mutual fund. Also may be the manager of a mutual fund.

Investment Bank. Financial intermediaries who perform a variety of services, including aiding in the sale of securities, facilitating Mergers and acquisitions, and other corporate reorganizations or may act as brokers to both individual and institutional clients.

Investment Banker. A bank or member of a bank whose primary function is to provide capital for companies and individuals to expand their wealth through investment. Investment bankers often assist in takeovers, changes of business, and new securities issues.

Investment Company. A corporation or trust whose primary purpose is to invest the funds of its shareholders.

Investment Counsel. A firm or individual which furnishes investment advice for a fee.

Investment Dealer. A securities firm.

Investment Fund. A term generally interchangeable with "mutual fund."

Investment Income. Income from investments rather than from work. It includes interest, dividends, capital gains distributions, capital gains (and losses) on sales, etc.

Investment Portfolio. The collection of assets that you have that are not used for everyday living expenses or short-term expenditures. This portfolio can contain taxable and tax-deferred investments.  Examples of taxable investments include: money market accounts; savings accounts; mutual funds; stocks and bonds; annuities; real estate (other than your personal residences); collectibles; precious metals; futures; and commodities.

Issued Shares. The number of securities of a company outstanding. This may be equal to or less than the number of shares a company is authorized to issue.

Issuer. The entity whose securities are being sold.