Glossary of Stock Market

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I

Initial Public Offering - IPO
The first sale of stock by a private company to the public.

Iceberg Order
A large single order that has been divided into smaller lots, usually by the use of an automated program, for the purpose of hiding the actual order quantity.

In And Out
The purchase and sale of a security within a short period of time, usually on the same day.

Income Fund
A mutual fund that seeks to provide stable current income by investing in securities that pay interest or dividends.

Income Statement
A record of a company's sales and expenses over a particular year or quarter

Index / Indices
An index is managed and publishes either by a stock exchange or a professional financial and investment body. It is representative of the market sentiment. Normally the index components are the highly traded stocks of that exchange. Usually they represent about 80 to 85 percent of the market capitalization and trading. Sectored indices like Industrial, banking, Utilities, etc is made up of the highly traded stocks in that particular sector. The BSE Sensex is based on 30 stocks as is New York 's Dow average. These 30 stocks, in number, are a miniscule percent of the total listed shares, but in terms of value of trade and market capitalization, they represent anything up to 85 per cent.

Industry Group
Companies in related businesses.

Index
A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it.

Inflation
Increase in the prices for goods and services. For the common man, this means he pays more for what he uses. For the stock market player, it could be both good and bad news. If cement prices are going up, is it because there is a shortage in output, a surge in construction activities or higher government taxes? There could be a number of reasons, each of them having a different impact on the fundamentals of the cement industry. If you are holding cement shares, should you hold on to them, buy more or sell? Try and figure it out. If you can't leave it your analyst.

Inflation Rate
An important economic indicator. The rate at which prices are rising. So, when the inflation rate is 2 percent, it means it is rising at the rate of 2 percent per year based on current prices. It does not mean that anything you buy will now cost you 2 percent more than it did last time.

Income Stocks
Stocks that have consistently paid high dividends. Contrary to what you might think after some time on the stock exchange, there really are such stocks. When you find one grab it and cherish it till death or inflation do you part if you have good base of income stocks, you can afford to speculate in higher risk stocks. But remember you have to keep an eye on the fundamentals of the company. Consistent does not mean ?for ever?.

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

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

Inorganic Growth
A growth in the operations of a business that arises from mergers or takeovers, rather than an increase in the companies own business activity.

Insider Information
Any knowledge about a company, its products, or securities not generally available to the public gained from a source inside the company. For instance if your daughter-in-law's sister's husband is working for a large public limited organization and lets fall during a family get-together that his company is planning to buy company XYZ and you immediately place a buy order for XYZ shares, that would be insider trading. It is legally in most countries for anyone to make a securities trade based on what they believe to be inside trading result in large fines or imprisonment or both. In India , SEBI is trying to improve its monitoring system, but the system is so widespread and disparate and the judicial system, which it's numerous levels of appeals, so time consuming and cumbersome that most insider trades are seldom reported or detected. But the system is being tightened up so think twice before you place that buy order for XYZ shares.

Insider Information
Material information about a company's activities that has not been disclosed to the public.

Insider Trading
The buying or selling of a security by someone who has access to material, nonpublic information about the security. Insider trading can be illegal or legal depending on when the insider makes the trade. It is illegal when the material information is still nonpublic.

Institutional Ownership
Shares of a company owned by pension funds, mutual fund, banks, financial institutions, etc

.Institutional Investor
A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions.

Intangibles
Soft assets such as patents, trademarks, etc.

Interest
Money charged by a lender to a borrower for the use of his or her money. Payment made at periodic investments on an investment.

Intraday
Stock trading tracked in periods shorter than one day. For instance the trades during the first two hours or last two hours of the trading day.

Intrinsic Value
A term favored by value oriented fundamental analysts to express the actual value of a corporation, as opposed to the current value based on the stock price. Usually calculated by adding the current value of estimated future earning to the book value.

Investment
Anything of value purchased to provide capital appreciation and /or income.Examples include stocks, bonds, mutual funds, unit investment trusts, certificates of deposit, money market funds and collectibles (not lottery tickets; that would be speculation not investment). Investments may also include artwork, antiques and real estate. Also, your wife's jeweler is an investment, so spend lavishly on her.

Investment Bank
An organization, usually a stock brokerage firm, involved in taking a new company public IPO, consulting on mergers and acquisitions, handling corporate borrowing, etc. An intermediary between an issuer of securities and the investing public. They handle the distribution of blocks of previously issued securities, either through secondary offering or through negotiations, maintain markets for securities already distributed, and act as finders in private placement of securities.

IPO (Initial Public Offering)
Equity or other issue which is presented to the market for the first time.

IRR (Internal Rate of Returns)
Internal Rate of Return is the rate at which the lender accounts for interest.

Issue

Any securities of a company, or the act of distributing such securities.

Inventory
Raw materials, work in process, and finished goods that have not been shipped to customers.

Interim Dividend
A dividend payment made before a company's AGM and final financial statements.

IPO Lock-Up
A contractual caveat referring to a period of time after a company has initially gone public, usually between 90 to 180 days. During these initial days of trading, company insiders or those holding majority stakes in the company are forbidden to sell any of their shares.

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