Implied volatility
The security's or similar securities' volatility in current market trading.
In-the-money option
An option having intrinsic value. A call option is called in-the-money if its strike price is below the current price of the underlying futures contract. A put option is called in-the-money if its strike price is above the current price of the underlying futures contract.
Index
Publicly available interest rate used to determine the interest rate due on an adjustable-rate mortgage.
Index ratio
For any particular date and any particular inflation-indexed security, the Reference CPI-U applicable to such date divided by the Reference CPI-U applicable to the original issue date (or dated date, when the dated date is different from the original issue date).
Industrial bonds
Bonds issued by companies in the industrial sector which may include manufacturers of materials, energy, capital goods, consumer durables and non-durables.
Industrial revenue bonds
Securities issued by a state, political subdivision or certain agencies or authorities, for certain specific purposes, but backed by the credit of a private enterprise.
Inflation-adjusted principal
For an inflation-indexed security, the principal amount of the security, derived by multiplying the par amount by the applicable index ratio.
Inflation-indexed securities
Notes periodically issued by the GSEs whose return is adjusted with changes in the PPI or CPI.
Information agent
Firm designated by Ginnie Mae to make certain information about its securities available to the public.
The amount a futures market participant must deposit into his margin account at the time he places an order to buy or sell a futures contract. Also referred to as original margin.
Initial offering price
The charge to an investor for a new bond. This is generally expressed as a percentage of face value. The bonds may not be sold at any lower price during the initial offering period.
Initial Public Offering (IPO)
The first sale of stock by a company to the public.
Insured bonds
Many municipal bonds are backed by municipal bond insurance that is specifically designed to reduce investment risk. In the event of default, the insurance company guarantees payment of principal and interest to the investors for as long as the default lasts. Most insured bonds carry the highest quality credit rating.
Interchangeable bonds
Bonds which can be converted from registered to coupon form, or vice versa, upon demand by the bearer.
Intercommodity spread
The purchase of a given delivery month of one futures market and the simultaneous sale of the same delivery month of a different, but related, futures market.
Interdelivery spread
The purchase of one delivery month of a given futures contract and simultaneous sale of another delivery month of the same commodity on the same exchange.
Interest
Compensation for the use of money, usually expressed as a percentage rate.
Interest only (IO)
A security that pays the investor some or all of the interest payments on the underlying assets and little or no principal. Declining interest rates have an adverse effect on IOs.
Interest only (IO) Class
A REMIC class that pays the investor some or all of the interest payments on the underlying securities and little or no principal. IO classes have either a nominal or notional principal balance. A nominal principal balance represents the actual but relatively small amount of principal that will be paid to the class. A notional principal balance is the amount used as a reference to calculate the amount of interest due on an IO class not entitled to receive any principal. Declining interest rates have an adverse effect on IOs.
Interest rate
The annual percentage rate of interest paid on the inflation-adjusted principal of a specific issue of notes or bonds.
Interest rate risk
The risk that the value of a bond will depreciate in response to an increase in interest rates. An inverse relationship exists between bond prices and yields for fixed-income securities. In a rising interest rate environment, bond prices will decrease and in a declining interest rate environment, bond prices will increase.
Interest rate swap
A transaction between two parties in which each agrees to exchange payments tied to different interest rates or indices for a specified period of time, generally based on a notional principal amount.
Intermarket spread
The sale of a given delivery month of a futures contract on one exchange and the simultaneous purchase of the same delivery month and futures contract on another exchange.
Intermediate-term mortgage
A mortgage loan with a contractual maturity at time of purchase equal to or less than 20 years.
Intrinsic value
The amount by which an option is in-the-money or an option having intrinsic value.
Introducing broker
A person or organization that solicits or accepts orders to buy or sell futures contracts or commodity options but does not accept money or other assets from customers to support such orders.
A REMIC tranche that pays an adjustable rate of interest that moves in the opposite direction from movements on a representative interest rate index such as the London Interbank Offered Rate (LIBOR), the Constant Maturity Treasury (CMT) or the Cost of Funds Index (COFI).
Inverse floating class
A REMIC class that pays an interest rate that adjusts periodically in the opposite direction of a specific index. Inverse floater adjustments may also be based on a multiple of the index. See inverse floater.
Inverted market
A futures market in which the relationship between two delivery months of the same commodity is abnormal.
Investment grade
Bonds considered appropriate by conservative investors because they represent moderate to low risk. These bonds are usually rated with one of the top four grades in the rating services. (eg.; Moody's, S & P, Fitch)
Investment only (IO) security
In the case of a REMIC, an IO tranche created deliberately to pay investors only interest and not principal. IO securities are priced at a deep discount to the "notional" amount of principal used to calculate the amount of interest due.
Invisible supply
Uncounted stocks of a commodity in the hands of wholesalers, manufacturers, and producers that cannot be identified accurately; stocks outside commercial channels but theoretically available to the market. J K L
Issue (v.)
Create securities and exchange them for cash or other assets; (n.) securities created from a particular act of issuing.
Issue date
The date on which a security is deemed to be issued or originated. Date of issuance of a Ginnie Mae MBS. The date on which a new issue Fannie Mae debt security settles.
Issue description
The description of the bond listing title of the issue, name of issuer, coupon and maturity date.
Issuer
An entity which issues and is obligated to pay principal and interest on securities. The entity that creates a debt security.