Illiquid:

The description of a security for which it is difficult to find a buyer or seller.

Illiquid Investment:

An illiquid investment is any investment that may be difficult to sell quickly at a price close to its market value. Examples include Stock in private unlisted companies, commercial real estate and limited partnerships.

Income Attribution:

Is the process specified under the Income Tax Act where certain investment income may be deemed taxable to a person other than the recipient, if the investment income was the result of certain transaction between family members.

Income Averaging Annuity:

A special type of annuity to spread the impact of income tax on certain types of taxable lump sum receipts.

Income Producing Property:

Property or real estate which produces an income, such as rent property, interest or dividends.

Income Splitting:

The process of diverting taxable income from an individual in a high tax bracket to one in a lower tax bracket.

Income Statement:

A financial statement that shows the components of profit, such as sales, expenses, taxes, and net profit.

Income Stocks:

Stocks that have a consistent, stable, above-average dividend yield.

Incorporation:

The legal process of creating a corporation by which an association or group of individuals becomes a legal entity, with limited liability.

Indenture of a Bond:

A legal statement spelling out the obligations of the bond issuer the future course of the economy. Hence, such an index is felt to rise in advance of a period of economic growth and fall prior to a recession.

Index:

A statistical yardstick, determined by tracking the ups and downs of a particular market by monitoring a group of securities over time.

Index-Linked Call Option:

The right but not the obligation to buy on or before a specified date, an underlying notional amount at a contracted price based on a stock market index.

Index-Linked GIC:

A Guaranteed Investment certificate that pays no interest but the return on the investment is linked to the stock market. Some link the return to the TSE 35 or TSE 100. The final return is the index gain plus averaging in the final year.

Indexed Plan:

A benefit plan whose level of benefits is related to a recognized index.

Indirect Financing:

The process whereby funds flow from savers to financial intermediaries and then to borrowers.

Inflation:

A condition of increasing prices. In Canada, inflation is generally measured by the Consumer Price Index (CPI).

Inflation Risk:

The uncertainty that the return on investment will be low enough to result in a negative, real, after-tax rate of return; a situation described as a decrease in purchasing power.

Inside Information:

News that is not yet publicly available of events concerning a security or the issuer of a security.

Insolvent:

You are insolvent if you have debt obligations in excess of $1,000 and are unable to meet your obligations as they come due, have ceased making payments, or have debts due and accruing which exceed the value of your assets.

Institutional Investors:

The financial intermediaries who invest the funds of individuals and corporations. Examples of such investors would be banks, trust companies, mutual funds, insurance companies, and pension funds.

Instrument:

Another word for security.

Insurance (Life):

Life insurance is one way to provide financial security for you, your dependents or business partners.

Term Insurance: This is a life insurance pure and simple. You choose the number of years (the term) you are insured and the amount your survivors get if you die within that term. The term you choose can be for a given number of years, for example 10 or 20, or up to a certain age, for example 65 or 100. The main features of term-to-100 policy are: 1. Fixed premiums, 2. Fixed death benefits, 3. No cash value.

Permanent Life Insurance:The most common types are whole and universal . Both offer lifetime protection. Renewal is not necessary as long as you pay the premiums. Some of the main features of each:

Whole Life: 1. Fixed premiums, 2. Fixed death benefits, 3. Fixed cash value

Universal Life:- 1. Flexible premiums, 2. Flexible death benefits, 3. Cash value (depends on how the premiums have been invested) 4. Policyholder directs where the premium funds are invested.

Insurer:

A group or agency that shares another party's risk in return for the payment of a premium.

Inter Vivos:

From the Latin for "between living persons," usually refers to a trust established during the lifetime of the person setting up the trust (the "settlor"), as opposed to a "testamentary" trust in a will which takes effect only at death.

Inter Vivos Trust:

A trust created while the person making the trust is still alive.

Interest:

The fee charged for the use of money supplied by a lender.

Interest Adjustment Date (I.A.D.) (Real Estate):

A date, usually one month before regular mortgage payments begin, when interest on monies advanced before that time is calculated and must be paid by the borrower.

Interest Expense:

Is the interest paid on money borrowed to earn investment income.

Interest Rate:

A fixed, specified ratio of compensation paid to a lender by a borrower on the amount loaned.

Interest Rate Caps and Floors:

Option contracts for specified periods, based on interest rates, for which a cost (premium) is settled in advance. In the case of a cap, the agreement places a maximum on the cost of interest rate borrowings. In the case of a floor, the agreement places a minimum on the yield of interest rate investments.

Interest Rate Options:

Options on three-month bankers' acceptances notes and long -term government of Canada bonds trade on the Montreal Exchange.

Interest Rates Risk:

Is the uncertainty in the direction of interest rates. Changers in interest rates could lead to capital loss, or a yield less than that available to other investors. Putting at risk the earning capacity of capital.

Interest Rates Swaps:

A contact between two parties to exchange a stream of interest rate payments, such as fixed rate payments for variable rates payments, on a specified notional value for a pre-determined time period. Swaps that have been entered into, but for which interest rate payment streams have not commenced by year-end, are referred to as forward starting swaps.

Internal Rate of Return (IRR):

Any IRR calculation must be based on continuous compounding, Thus the Internal rate of return of an investment, is the growth rate of the money over a time period relative to the amount invested. IRR, which compares the profit to the amount invested, and is expressed as a percent gain or loss for easy comparison with other percent changes for the same time period.

Intestacy Laws:

The provincial laws governing distribution of the assets of a person who dies without a will.

Intestate:

Not having made and left a valid will. The term is also used to refer to a person who dies without leaving a valid will.

Intrinsic Value:

The amount by which the price of a warrant or call option exceeds the price at which the warrant or option may be exercised.

Inventory (Real Estate):

Real Estate firms provide statistics that include all office building in (say Toronto) with greater than 20,000 sq. ft. of office space. This includes multi-tenant, single user, and government facilities. The same type of statistics are available on residential real estate.

Inventory Liquidation:

The sale of business inventories with the express purpose of reducing the size of such inventories.

Investment Advisor:

Investment counsel to a mutual fund. Also may be the manager of a mutual fund.

Investment Banker:

A firm that engages in the origination, underwriting, and distribution of new issues.

Investment Company:

A corporation or trust whose primary purpose is to invest the funds of its shareholders.

Investment Considerations:

Choosing which investments are right for you will depend on a number of factors:

Your Primary Goal - Is it to have your money readily accessible, to have a dependable source of regular income, or to build your assets over time? Each type of investment fulfills a different need.

Your Time Horizon - When will you need the proceeds of your investment? If it's in a few months or years, short-term cash or income investments should be considered. With a long term horizon, you may want to add growth investments to the mix.

Your Risk Tolerance - Growth investments with a higher level of risk will generally pay higher return, but if your nest egg and peace of mind are key, investments with safety of principal may be the answer. (See Risk Tolerance)

Investment Counselor:

A person who, for a fee, advises you on which investments you should make.

Investment Dealer:

A company that acts as a middleman in the capital markets by buying and selling securities with its own funds, and then filling sale or purchase requests from its own security holdings. A dealer will also act as a broker, but a broker may not necessarily be a dealer.

Investment Fund:

A term generally interchangeable with "mutual fund".

Investment Strategy:

The method used to select which assets to include in a portfolio and to decide when to buy and when to sell those assets.

Investor profile:

Generally 3 different types of investors, conservative, moderate and aggressive. Factors such as age, years to retirement, accumulated savings and risk tolerance determine one's profile

Issue:

A set of securities sold at on time for a specific purpose by a company or a government.

Issued Shares:

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.

IFIC:

Investment Funds Institute of Canada. The mutual fund industry trade association set up to serve its members, co-operate with regulatory bodies, and protect the interest of the investing public that use mutual funds as a medium for their investments.

IPO:

Initial Public Offering.

This Glossary of financial terms was created by Fiscal Agents Financial Information Services, Research Department. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, mechanical, electronic, photocopying, recording, or otherwise, without the prior written permission of Fiscal Agents. Copyright Fiscal Agents © 2000. All Worldwide Rights Reserved. Click to contact Glossary editor or see the permissions page.