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Illiquid Market
Market which has no volume that subsequently creates a lot of slippage due to lack of trading volume.
Immediate/Cancel
An order which must be filled immediately or canceled.
Immunization Strategy
A bond portfolio strategy whose goal is to immunize a portfolio against a general change in the rate of interest.
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, using an option-pricing model.
In-the-Money
If you were to exercise an option and it would general a profit at the time, it is known to be in the money.
In-the-Money Option
A "call" option is in-the-money if the strike price is less than the market price of the underlying security. A "put" option isin-the-money if the strike price is greater than the market price of the underlying security Intrinsic Value. The amount by which a marketis in-the-money. Out-of-the-money options have no intrinsic value. Calls = underlying -strike price. Puts = strike price - underlying.
Inception Date
The date a fund was first made available to investors.
Income
1) Payments of dividends, interest, and/or short term capital gains earned by securities held by a fund. Income dividends are paid after deducting operating expenses. 2) An investment objective of many fixed income funds. Capital appreciation is not a consideration for these funds.
Income Fund
A fund that invests primarily in fixed income securities and/or high-yielding stocks. In general, income funds seek to provide current income rather than growth of capital.
Income Statement
A statement showing the revenues, expenses, and income (the difference between revenues and expenses) of a corporation over some period of time.
Index
A statistical measure of the changes in a portfolio representing a market. The Standard & Poor's 500 is the most well-known index.
Index fund
An index fund is a mutual fund that mirrors as closely as possible the performance of a stock market index. For example, many mutual fund companies have since established S&P 500 index funds to mirror that index by purchasing all 500 stocks in the same percentages as the index.
Index option
An option whose underlying security is a stock index. This includes options on the overall market (such as the S&P 100 Index options) as well as options on narrower-based industry groups. Index options are cash settlement options.
Indexing
Indexing is a strategy to match the average performance of a market or group of stocks. A set formula is used to represent the index's value at any given time. ETFs track indexes.
Indifference curve
The graphical expression of a utility function, where the horizontal axis measures risk and the vertical axis measures expected return.
Individual Retirement Account (IRA)
A personal savings plan that offers tax advantages to save and invest for retirement. Contributions are often tax deductible in whole or in part, depending upon individual cirumstances, including compensation levels and participation in an employer sponsored qualified retirement plan. Income derived from investments in a traditional deductible or nondeductible IRA are tax deferred until withdrawn. Under certain circumstances, withdrawals from a Roth IRA are tax free. Tax penalties may apply to IRA distributions taken before age 59 1/2. Contributions to an IRA may not exceed $2,000 per year. Individuals with earned income may contribute up to $2,000 to the IRA of a nonemployed spouse.
Inflation risk
Also called purchasing-power risk, the risk that changes in the real return the investor will realize after adjusting for inflation will be negative.
Information-motivated trades
Trades in which an investor believes he or she possesses pertinent information not currently reflected in the stock's price.
Informationless trades
Trades that are the result of either a reallocation of wealth or an implementation of an investment strategy that only utilizes existing information.
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