Business / Finance Glossary

Index Model: Investment fund designed to match the returns on a stock market index. Mutual fund whose portfolio matches that of a broad-based index such as the S&P 500 and whose performance therefore mir . . . View Full Definition

Index Option: A model of stock returns using a market index such as the S&P 500 to represent common or systematic risk factors.

Index Warrant: A call or put option based on a stock market index.

Indexed Bond: A stock index option issued by either a corporate or a sovereign entity as part of a security offering, and guaranteed by an option clearing corporation.

Indexing: Bond whose payments are linked to an index, e.g., the consumer price index.

Indicated Dividend: A passive instrument strategy calling for construction of a portfolio of stocks designed to track the total return performance of an index of stocks.

Indicated Yield: Total amount of dividends that would be paid on a share of stock over the next 12 months if each dividend were the same amount as the most recent dividend. Usually represented by the letter . . . View Full Definition

Indication: The yield, based on the most recent quarterly rate times four. To determine the yield, divide the annual dividend by the price of the stock. The resulting number is represented as a percenta . . . View Full Definition

Indication Of Interest: (1) Notice given by a dealer (through Autex) or customer of an interest in buying or selling stock, sometimes including specific volume and price; (2) approximation of where a specialist see . . . View Full Definition

Indicator: A dealer's or investor's interest in purchasing (not commitment to buy) securities that are still in the underwriting stage and are being registered by the Securities and Exchange Commission.

Indifference Curve: Used in the context of general equities. Technical or fundamental measurement that securities analysts use to forecast the market's direction, such as investment advisory sentiment, volume o . . . View Full Definition

Indirect Quote: The expression in a graph of a utility function, where the horizontal axis measures risk and the vertical axis measures expected return. The curve connects all portfolios with the same utility.

Individual Retirement Account (IRA): For foreign exchange, the number of units of a foreign currency needed to buy one U.S. dollar.

Individual Retirement Account (IRA) Rollover: A retirement account that may be established by an employed person. IRA contributions are tax deductible according to certain guidelines, and the gains in the account are tax-deferred.

Individual Tax Return: A provision of the law governing IRA's that enables a retiree or anyone receiving a lump-sum payment from a pension, profit-sharing, or salary reduction plan to transfer the amount into an IRA.

Inductive Reasoning: A tax return filed by an individual to account for their personal income and taxes payable.

Industrial Production: The attempt to use information about a specific situation to draw a conclusion.

Industrial Revenue Bond (IRB): A statistic determined by the Federal Reserve Board focusing on the total output of all U.S. factories and mines on a monthly basis. Used as an economic indicator.

Industrials: A bond issued by local government agencies on behalf of corporations.

Industry: General term used in the financial markets to refer to companies manufacturing, producing, or distributing goods and services.

Infant Industry Argument: The category describing a company's primary business activity. This category is usually determined by the largest portion of revenue.

Inflation: Argument that industries in the developing and emerging sectors of the economy need protection against international competition in order to establish themselves.

Inflation Accounting: The rate at which the general level of prices for goods and services is rising.

Inflation Hedge: Accounting practices allowing for the effects of inflation.

Inflation Risk: Investments designed to hedge against inflation and the loss of purchasing power associated with it.

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