Glossary

Click on a letter to browse the terms associated with it.

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IMF	International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. The IMF supports countries with balance of payments problems with the provision of loans.
IMM	International Monetary Market part of the Chicago Mercantile Exchange that lists a number of currency and financial futures Implied volatilityA measurement of the market's expected price range of the underlying currency futures based on the traded option premiums.
Implied Rates	The interest rate determined by calculating the difference between spot and forward rates.
Implied volatility	The expected volatility in a stock's return derived from its option price, using an option-pricing model.
Income statement	A statement showing the revenues, expenses, and income (the difference between revenues and expenses) of a corporation over some period of time.
Indicative quote	A market-maker's price which is not firm.
Inflation	Continued rise in the general price level in conjunction with a related drop in purchasing power. Sometimes referred to as an excessive movement in such price levels.
Inflation risk	Also called purchasing-power risk, the risk that changes in the real return the investor will realize after adjusting for inflation will be negative.
Initial margin	The margin required by a Foreign Exchange firm to initiate the buying or selling of a determined amount of currency.
Inter-bank rates	The bid and offer rates at which international banks place deposits with each other. The basis of the Interbank market.
Interest Arbitrage	Switching into another currency by buying spot and selling forward, and investing proceeds in order to obtain a higher interest yield. Interest arbitrage can be inward, i.e. from foreign currency into the local one or outward, i.e. from the local currency to the foreign one. Sometimes better results can be obtained by not selling the forward interest amount. In that case some treat it as no longer being a complete arbitrage, as if the exchange rate moved against the arbitrageur, the profit on the transaction may create a loss.
Institutional investors	Organizations that invest, including insurance companies, depository institutions, pension funds, investment companies, and endowment funds.
Interest parity	One currency is in interest parity with another when the difference in the interest rates is equalized by the forward exchange margins. For instance, if the operative interest rate in Japan is 3% and in the UK 6%, a forward premium of 3% for the Japanese Yen against sterling would bring about interest parity.
Interest rate Swaps	An agreement to swap interest rate exposures from floating to fixed or vice versa. There is no swap of the principal. It is the interest cash flows be they payments or receipts that are exchanged.
Intangible asset	A legal claim to some future benefit, typically a claim to future cash. Financial assets, also called financial instruments or securities, are intangible assets.
Interest Rate Cap	Also called an interest rate ceiling, an interest rate agreement in which payments are made when the reference rate exceeds the strike rate.
Interest rate risk	For a bond, the risk that a rise in interest rates will decrease the bond's price. For a depository institution, also called funding risk, the risk that spread income will suffer because of a change in interest rates.
Interest rate swap	A binding agreement between counterparties to exchange periodic interest payments on some predetermined dollar principal, which is called the notional principal amount.
Intermarket sector spread	The spread between the interest rate offered in two sectors of the bond market for issues of the same maturity.
Intermarket spread swaps	An exchange of one bond for another based on the manager's projection of a realignment of spreads between sectors of the bond market.
In-the-Money	A put option that has a strike price higher than the underlying futures price, or a call option with a strike price lower than the underlying futures price. For example, if the March COMEX silver futures contract is trading at $6 an ounce, a March call with a strike price of 550 would be considered in-the-money by $0.50 an ounce
Intrinsic value	The amount by which an option is in-the-money. An option which is not in-the-money has no intrinsic value
Intervention	Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.
Investment management	Also called portfolio management and money management, the process of managing money.
Investment manager	Also called a portfolio manager and money manager, the individual who manages a portfolio of investments.
Investor's equity	The balance of a margin account