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Glossary of Investment Terms

 

I

 

I-Bonds

 

Inflation indexed savings bonds issued by the U.S. Treasury with a 30-year maturity that offer special tax benefits because they are exempt from state and local income taxes.

 

 

 

In-the-Money

 

For a call option in options trading; the stock price is greater than the strike price. For a put option, the stock price is less than the strike price.

 

 

 

Index

 

Statistical composite that measures changes in financial markets. Indicies measure the ups and downs of stock, bond and commodities markets. Some well-known indicies are the Dow Jones Industrial Average, the NYSE Composite, and the S&P 500 Index.

 

 

 

Index Options

 

An option contract on an index.

 

 

 

Individual Retirement Account (IRA)

 

Personal, tax-deferred, retirement account that an employed person can set up with a deposit limited to $3,000.00 per year, through 2004. Contributions for 2005 to 2007 increase to $4,000.00 and contributions from 2008 and beyond will increase to $5,000.00 according to recent IRA legislation. Catch-up contributions are also available for IRA holders 50 and older. These individuals may contribute an additional $500.00 for years 2002 through 2005 and $1,000.00 for years 2006 and beyond.

 

 

 

Industrial Development Bond

 

Bond issued to finance fixed assets that are then leased to private firms, whose payments amortize the debt.

 

 

 

Inflation Risk

 

Chance that the value of assets or of income will be eroded by inflation as it shrinks the value of a country's currency.

 

 

 

Initial Call

 

Also known as a fed call, a request for additional funds after a purchase. An initial call must be met with cleared funds or by depositing marginable stock. Stock cannot be sold to cover an initial call. See Regulation T.

 

 

 

Initial Public Offering (IPO)

 

Corporation's first offering of stock to the public.

 

 

 

Interest

 

Cost of using money, expressed as a rate per period of time, usually one year.

 

 

 

Interest Rate

 

Rate of interest charged for the use of money, usually expressed at an annual rate. The rate is derived by dividing the amount of interest by the amount of principal borrowed.

 

 

 

Interest Rate Risk

 

Risk that changes in interest rates will adversely affect the value of an investor's securities.

 

 

 

InterNotes

 

Investment grade corporate notes, designed for individual investors.

 

 

 

Intrinsic Value

 

The difference between the strike price and the stock price in options trading.

 

 

 

Investment Grade

 

Bond with a credit rating of AAA to BBB.

 

 

 

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