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Implied volatility |
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The volatility percentage that justifies an option's price. A theoretical
option pricing model can be used to generate an option's individual volatility
when the five remaining quantifiable factors (security price, time until
expiration, strike price, interest rates, and cash dividends) are entered
along with the price of the option itself. Implied volatility is a measure
of the true value of an option set by market forces. |
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In-and-out |
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Purchase and sale of the same asset within a short period. |
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Income bond |
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This type of bond will still pay the principal of the investment, however,
it will pay interest only when earned. |
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Income funds |
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Mutual funds that invest primarily in fixed-income securities such as bonds,
mortgages and preferred shares. Their primary objective is to produce income
for investors, while preserving capital. |
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Income stock |
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A security with a solid record of dividend payments, which offers a dividend
yield higher than the average common stock. |
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Index |
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A compilation of several stock prices into a single number. Example: the
S&P/TSE 60 Index. |
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Index fund |
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A mutual fund that matches its portfolio to that of a specific financial
market index, with the objective of duplicating the general performance
of the market in which it invests. |
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Index futures |
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See Stock index futures. |
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Index option |
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An option whose underlying asset is an index. Generally, index options are
cash-settled. |
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Indices or Index |
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Statistical tools that measure the state of the stock market or the economy,
based on the performance of stocks or other meaningful components. E.g.
S&P/TSE 60 Index, Consumer Price Index (CPI). See also Stock index.
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Inflation |
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A sustained trend of increasing prices. In Canada, inflation is generally
measured by the Consumer Price Index. |
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Initial public offering (IPO) |
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A company's first issue of shares to the general public. Also known as a
new issue. |
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Insider |
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All directors and senior officers of a company and those who may be presumed
to have access to inside information concerning the company. An individual
owning more than 10% of the voting shares in a company is also considered
an insider. |
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Insider trading |
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There are two types of insider trading. The first type is stock transactions
by insiders of a company. These must be reported to the appropriate securities
commissions. The second type of insider trading is acting upon material
information that is not public knowledge. This type of insider trading is
illegal. |
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Institution |
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A professional investment management company. Typically, this term is used
to describe large money managers such as banks, pension funds, mutual funds,
and insurance companies. |
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Inter-commodity spread |
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A spread trade involving the same month of different but related futures
contracts. |
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Inter-market spread |
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A spread trade involving same or related securities at different exchanges.
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Interest |
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Payments made by a borrower to a lender for the use of the lender's money.
A corporation pays interest on bonds to its bondholders. |
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Interest rate swap |
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An agreement to exchange periodic payments related to interest rates on
a single currency: fixed for floating, or floating for floating based on
different indexes. |
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Interlisted |
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A security which is listed on more than one exchange. |
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International fund |
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A mutual fund that invests in securities from a number of countries.
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In-the-money option |
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When the exercise price of a call (or put) option is lower (or higher) than
the share price. |
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Intra-market spread |
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A spread trade involving different contract months of the same security.
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Intrinsic value |
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Positive difference between the security price and the exercise price of
a call option or between the exercise price of a put option and the security
price. By definition, the intrinsic value cannot be negative. |
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Investment adviser |
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Investment counsel to a mutual fund. Also may be the manager of a mutual
fund. |
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Investment company |
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A corporation or trust whose primary purpose is to invest the funds of its
shareholders. |
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Investment counsel |
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A firm which or an individual who furnishes investment advice for a fee.
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Investment dealer |
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A securities firm. |
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Investment Dealers Association of Canada (IDA) |
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The Investment Dealers Association of Canada is the Canadian investment
industry's national trade association and self-regulatory organization.
The IDA's mission is to foster efficient capital markets by encouraging
participation on the savings and investment process, and by ensuring the
integrity of the marketplace. |
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Investment fund |
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A term generally interchangeable with "mutual fund". |
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Investment Funds Institute of Canada (IFIC) |
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The mutual fund industry trade association set up to serve its members,
co-operate with regulatory bodies, and protect the interests of the investing
public that use mutual funds as a medium for their investments. |
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Investment policy |
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The agreement between a portfolio manager and a client that provides the
guidelines for a manager. |
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Investor |
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An individual whose principal concern in the purchase of a security is the
minimization of risk for a maximum return. |
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Iron butterfly |
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An option strategy with limited risk and limited profit potential that involves
both a long (or short) straddle, and a short (or long) combination. An iron
butterfly contains four options and is an equivalent strategy to a regular
butterfly spread which contains only three options. For example, a short
iron butterfly might be: buying 1 XYZ May 60 call and 1 May 60 put, and
writing 1 XYZ May 65 call and writing 1 XYZ May 55 put. |
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Issue |
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1. Any of a company's securities. 2. The act of distributing such securities.
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Issued shares |
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The number of securities of a company outstanding. This may be equal to
or less than the number of shares a company is authorized to issue.
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Issuer bid |
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An offer by an issuer to security holders to buy back any of its own shares
or other securities convertible into its shares. |
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