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Illiquid

Investments that are not readily convertible into cash. For example, contractual investments like annuities, real estate, and collectibles.

Immediate Family

A legal description in some financial service agreements that includes parents, brothers, sisters, children, father-in-law, mother-in-law, sister-in-law, and brother-in-law.

Immunization Strategy

A bond portfolio management strategy that uses duration to eliminate interest rate risk.

Imputed Interest

Interest that is not paid but must be recognized for tax purposes. For example, a zero coupon bond that is sold at a discount. The difference between the discount price and par is interest.

Income Dividend

Income that is received by mutual funds and paid out to shareholders.

Income Mutual Fund

A mutual fund that invests in securities that produce above average amounts of income (dividends and interest).

Income Stock

A stock that pays above average dividends on a consistent basis.

Indemnify

An agreement by one party to protect a second party from financial loss.

Independent Contractor

A high percentage of financial advisors are independent contractors and are not employees of the financial services firms that license them. They pay their own expenses and taxes and retain higher percentages of revenues that are generated from investor assets. Independent contractors usually have less pressure to sell particular products compared to advisors who are employees.

Index

A composite of securities that measures the performance of asset classes, economic sectors, geographies, etc. For example, the Dow Jones Industrial Average tracks the performance of 30 blue chip stocks. Indexes provide insight into the performance of the securities markets.

Index Fund

A mutual fund that replicates the performance of an index like the S&P 500. The fund produces the performance of the index for low fees and taxes. Passive investors who want to earn the performance of the market invest in index funds.

Indicated Yield

Coupon or dividend expressed as a percentage of current market price.

Indicator

Data points that securities analysts use to forecast the future: market direction, inflation, interest rates, etc.

Individual Retirement Account (IRA)

Personal, tax-deferred, retirement account that people can set-up with a corporate trustee to accumulate additional assets for retirement.

Inverted Yield Curve

Yield curves are inverted when shorter-term bonds have higher interest rates than longer-term bonds.

IRA Rollover

Investors who retire or leave their companies can roll assets in company pension plans over into IRAs and not trigger a taxable event. Investors have 60 days to complete trustee-to-trustee transfers.

Investment Advisor Representative

A financial advisor who is employed or licensed by a Registered Investment Advisor.

Inefficient Markets

Some segments of the stock market are not priced as efficiently as other parts of the market. For example, small companies are not priced as efficiently as large companies because smaller numbers of analysts follow their stocks.

Inflation

Price increases that impact the cost of goods that are purchased by consumers. Rising prices occur when demand factors exceed supply factors.

Inflation Hedge

Some investments help protect investor assets from a loss of purchasing power.

Inflation Indexed Securities

Some bonds guarantee a return that that is greater than inflation if held to maturity.

Information Ratio

Variation of the Sharpe Ratio that measures the consistency of a portfolio manager's performance. It is calculated by taking the average excess portfolio return and dividing it by the standard deviation of the excess return.

Initial Public Offering (IPO)

A company’s first offering of stock to the public.

Inside Information

Information in public companies that is known by key employees and others, but is not known by the general investing public.

Insider

A person who is aware of key information about a public company before it is announced to the public. Unethical executives, directors, and others will buy and sell the stock of a company using this information.