Initial Public Offering/IPO:

The real or expected period of time during which an investment is attributable to a particular investor. In a long position, holding period refers to the time between an asset’s purchase and its sale. In a short sale, the holding period is the time between when a short seller initially borrows an asset from a brokerage, and when he or she sells it back—in other words, the length of time for which the short position is held.

In the Penalty Box:

When a company’s stock price is in the doldrums and has yet to rebound because of poor earnings, government regulation, or some other reason.

Incentive Stock Option:

A type of employee stock option with a tax benefit, when you exercise, of not having to pay ordinary income tax. Instead, the options are taxed at a capital gains rate.

Income Stock:

A stock with a history of regular dividend payments that constitute the largest portion of the stock’s overall return.

Indenture:

A contract between an issuer of bonds and the bondholder stating the time period before repayment, amount of interest paid, if the bond is convertible (and if so, at what price or what ratio), if the bond is callable and the amount of money that is to be repaid.

Index Fund:

A portfolio of investments that is weighted the same as a stock-exchange index in order to mirror its performance.

This process is also referred to as “indexing”.

Individual Retirement Account (IRA):

An IRA is a retirement investing tool that can be either an “individual retirement account” or an “individual retirement annuity”. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.

Traditional and Roth IRAs are established by individual taxpayers, who are allowed to contribute 100% of compensation (self-employment income for sole proprietors and partners) up to a set maximum dollar amount. Contributions to the Traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and coverage by an employer-sponsored retirement plan. Roth IRA contributions are not tax-deductible.

SEPs and SIMPLEs are retirement plans established by employers. Individual participant’s contributions are made to SEP IRAs and SIMPLE IRAs.

Inflation:

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

Inheritance Tax:

In some states in the U.S. (and in the United Kingdom), a tax imposed on those who inherit assets from a deceased person. The tax rate for inheritance taxes depends on the value of the property received by the heir or beneficiary and his/her relationship to the decedent.

Inheritance tax is known in some countries as a “death duty” and is occasionally called “the last twist of the taxman’s knife”.

Insider Trading:

The buying or selling of a security by someone who has access to material, nonpublic information about the security.

Interest Rate:

The monthly effective rate paid (or received, if you are a creditor) on borrowed money. Expressed as a percentage of the sum borrowed.

Intrinsic Value:

1. The value of a company or an asset based on an underlying perception of the value.

2. For call options, this is the difference between the underlying stock’s price and the strike price. For put options, it is the difference between the strike price and the underlying stock’s price. In the case of both puts and calls, if the difference between the underlying stock’s price and the strike price is negative, the value is given as zero.

Inverted Yield Curve:

An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.

Issuer:

A legal entity that develops, registers and sells securities for the purpose of financing its operations. Issuers may be domestic or foreign governments, corporations or investment trusts. Issuers are legally responsible for the obligations of the issue and for reporting financial conditions, material developments and any other operational activities as required by the regulations of their jurisdictions. The most common types of securities issued are common and preferred stocks, bonds, notes, debentures, bills and derivatives.