IMM (International Monetary Market) the financial futures market within the Chicago Mercantile Exchange.
Immunizationthe construction of an asset and a liability that are subject to offsetting changes in value.
Implicit claim a tacit rather than contractual promise of continuing service and delivery of expected quality to customers and job security to employees.
In play because of a bid or rumors of a bid, the financial community regards the company as receptive or vulnerable to takeover bids.
In-the-money option an option that would be worth exercising if it expired immediately.
Incentive stock option (ISO)an executive compensation plan to align the interests of managers with stockholders. Executives are issued options whose exercise price is equal to or greater than the stock price at the time of issue and thus have value only if the stock price rises, giving managers incentives to take actions to maximize the stock price.
Income bonds are bonds on which interest is payable only if earned.
Income stocks are stocks with high dividend yields or no positive-NPV investment opportunities.
Increased debt capacity hypothesis a theory that post merger financial leverage increase are the result of increased debt capacity (as opposed to the firms involved having been underleveraged before the merger) due to reduced expected bankruptcy costs.
Indenturethe contact between a firm and its bondholders which sets out the terms and conditions of the borrowing, and the rights and obligations of each party (covenants).
Indexed bonds are those whose payments are linked to an index i.e. a consumer price index.
Indexed currency option note (ICON)a Eurobond providing a principal repayment that is linked to the value of the bond’s currency (i.e. dollar bond whose principal repayment declines if the dollar appreciates against the yen).
Individual Retirement Account (IRA) an IRS-approved pension plan for individuals.
Industrial revenue bond (IRB) issued by local government agencies on behalf of corporations.
Industry life cycle a conceptual model of the different stages of an industry’s development:
1) Development stage-new product, high investment needs, losses;
2) Growth stage-consumer acceptance, expanding sales, high profitability, ease of entry;
3) Maturity stage-sales growth slows, excess capacity, prices and profits decline;
Key period-for merger stage;
4) Decline stage-substitute products emerge, sales growth declines, pressure for mergers to survive.
Inferior-vote stock in dual class stock firms, the class of common stock which has less voting power, i.e. may be able to elect only a minority on the board of directors; may be compensated with higher dividends.
Informal organization generally, patterns of human behavior and relationships coexisting with, or lying outside, the formal organization structure. A network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another.
Initial public offering (IPO) the first offering to the public of common stock i.e. of a former privately held firm, or a portion of the common stock of a hitherto wholly-owned subsidiary.
Intangible assets non-material assets such as technical expertise, trademarks, and patterns.
Integer programming variant of linear programming where the solution values must be integers.
Interest cover times interval earned.
Interest equalization tax is a tax on foreign investment by residents of the U.S.
Interest-rate parity a theory that the differential between the forward exchange rate and the spot exchange rate is equal to the differential between the foreign and domestic interest rates.
Intermediationinvestment through a financial institution.
Internal finance is the finance generated within a firm by retained earnings and depreciation.
Internal rate of return (IRR) a capital budgeting method which finds the discount rate (the IRR) which equates the present value of cash-inflows and investment outlays. The IRR must exceed the relevant risk-adjusted cost of capital for the project to be acceptable.
International Banking Facility (IBF) a branch that an American bank establishes in the United States to do eurocurrency business.
Interval measure the number of days that a firm can finance operations without additional cash income.
Investment grade bonds are bonds rated Baa or above.
Investment requirements ratio a firm’s investment expenditures (or opportunities) in relation to after tax cash-flows.
Investment tax credit proportion of new capital investment that can be used to reduce a company’s tax bill.
