International Financial Reporting Standards are accounting standards set by the International Accounting Standards Board....more on IFRS
Impairment
The cost shown in the profit and loss account as the result of a fall in the value of an asset....more on Impairment
Implied volatility
The level of volatility which the market implicitly expects given the current market price of a security....more on Implied volatility
In the money
A term used to indicate than an to indicate that the intrinsic value of an option is positive....more on In the money
Income effect
The component of the increase in sales of a good with lower prices attributable to consumers being better off as a result of the lower price...more on the income effect
Income elasticity
The rate of change of demand for a good with change in consumers incomes...more on the income effect
A financial statement that shows the profit or loss a company has made over a period of time....more on Income statement
Incumbent telco
A former monopoly that still has a dominant market share. For example, the incumbent telco in Britain is BT, the former British Telecom....more on Incumbent telco
Index
An index tracks the movement in the value of a market, sector or a region....more on Index
Index tracker
A collective investment vehicle that is designed to replicate the performance of a particular index....more on Index tracker
Indirect beneficial interest
An financial interest, usually in the context of disclosure, that beneficially owned by a connected person....more on indirect beneficial interest
The rate at which prices rise. There are many measures used for different purposes....more on Inflation
Insider ring
A group of people who collaborate to profit from insider trading....more on insider rings
Insider trading
Making investment decisions using information that should be confidential. It is a criminal offence in most countries....more on Insider trading
Insolvent
Unable to pay debts, or having liabilities greater than assets....more on Insolvent
Institutional broking
Stock (and other) broking services supplied, usually together with research, to fund managers and other financial institutions....more on Institutional broking
Intangible assets
Assets that do not have a definite form. They include goodwill, patents, trademarks and capitalised development costs....more on Intangible assets
Intermediaries who act for brokers and market makers) who wish to buy or sell substantial quantities without revealing their identities....more on Inter-dealer broker
Interest income minus interest expenses as a percentage of average interest earning assets....more on Interest margin
Interest rate
Although interest rates may appear to be straightforward, they may be quoted and calculated in a number of different ways....more on Interest rate
Interest rate parity
Differences in different currencies' interest rates should equal the difference between the spot the forward exchange rates....more on Interest rate parity
Interest rate risk
This is the financial risk to which a portfolio or institution is exposed to if interest rates change....more on Interest rate risk
Interest spread
(interest income ÷ interest earning assets) - (interest expense ÷ interest bearing liabilities)...more on Interest spread
Intrinsic value
The amount of money an option would make by exercising it immediately; the price difference between the strike price and the price of the underlying....more on Intrinsic value
Inventory
Current assets held for sale, or for processing and subsequent re-sale....more on Inventory
Investment strategy
An approach to investing, a methodology used to pick investments, or a choice of investments....more on Investment strategy
Investment style
An approach to investing, a methodology used to pick investments, or a choice of investments....more on Investment style
Investment trust
Companies whose sole business is to manage the investments it owns. A somewhat misleading term used for historical reasons....more on Investment trust
The sale of shares to the public as a precursor to the shares trading on an exchange for the first time....more on IPO
IRR
The discount rate at which the net present value is zero....more on IRR
Islamic banking
Essentially a specific type of ethical investing. Its major distinguishing feature is the ban on interest....more on Islamic banking
ISIN
A unique identity number for securities allocated through an international mechanism; very useful for international clearing and settlement systems....more on ISIN
J-curve
A dip followed by slower, but sustained growth in the longer term, as allegedly happens when a currency depreciates....more on J-curve
A business in which the main cost is that of labour and it is high compared to sales....more on Labour intensive
Law of one price
Two portfolios that will produce exactly the same cash flows in the future must have the same value now....more on Law of one price
Leveraged buy-out (LBO)
An acquisition which is largely funded by debt; popular with private equity firms that often make large acquisitions with comparatively limited resources....more on Leveraged buy-out (LBO)
LFL
An abbreviation of like-for-like. LFL numbers strip out the effect of shop openings and closures on retailers' sales or profits....more on LFL
Libor
The interest rate at which banks borrow funds from other banks in the London interbank market. Widely used as the reference rate....more on Libor
Life-cycle investing
A strategy of varying asset allocation to match an investor's age and stage of life, usually shifting to lower risk assets over time....more on life-cycle investing
LIFO
A method of valuing stocks (inventory) by assuming that the most recent purchases are used first....more on LIFO
Like-for-like
LFL numbers strip out the effect of shop openings and closures on retailers sales or profits....more on Like-for-like
The limitation of liability for a corporation's debt to the corporation itself, shielding its owners (e.g. shareholders)....more on Limited liability
Liquidation
The "winding up" of a company, so that it ceases to exist. Companies being liquidated may be insolvent, or merely ceasing operations. ...more on Liquidation
Liquidity
How tradeable a security is. A security that is constantly trading in large quantities it is can be bought or sold easily, quickly and with less likelihood of influencing the price....more on Liquidity
Liquidity premium
The extra return that compensates investors for investing in an illiquid security....more on liquidity premium
Listed company
A company is "listed" if its securities trade on financial exchanges....more on Listed company
The connection from a telephone exchange to a subscriber’s premises; enormously expensive for new entrants to replicate....more on Local loop
Local loop unbundling
A regulators requirement that incumbent telecoms companies allow other operators to use their local loops at wholesale rates....more on Local loop unbundling
Extracted from natural gas or from the refinery processes. Most LPG is used for fuel, but it is also used as a refrigerant and an aerosol propellant....more on LPG (Liquefied Petroleum Gas)
M & A
Mergers and acquisition: a lucrative line of advisory work for investment banks....more on M & A
M0 (monetary base)
Bank notes and coins in circulation plus banks deposits with the central bank....more on M0 (monetary base)
M1
A measure of money supply: bank notes and coins plus sight deposits...more on M1
M2
A narrow measure of money supply that includes retail bank deposits. In the UK equivalent to the retail element of M4...more on M2
A shareholder of group of connected shareholders who can cast the majority of votes at a general meeting of a company....more on Majority shareholder
Management buy-in
The purchase of a business by new owner-managers, usually with private equity backing....more on management buy-in
Mandatory offer
An offer to buy the remaining shares, required by the City Code of a shareholder or concert party that has bought a 30% or greater stake....more on Mandatory offer
Margin trading
Investing in securities with borrowed money, using the securities themselves as security; greatly increasing both risk and potential profit....more on Margin trading
Marginal cost
The increase in total costs as a result of producing one extra unit of output....more on marginal cost
A dealer who receives privileges in share dealing in return for providing liquidity, usually by always quoting firm bid and offer prices....more on Market maker
Market order
an order to buy or sell a quantity of securities at the current market price...more on Market order
Market neutral
A market neutral portfolio is one that is fully hedged against the impact of market movements....more on Market neutral
Market PE
The PE ratio of an entire market. Total market cap ÷total net profits....more on Market PE
Market penetration
The proportion (as a percentage) of a potential market who actually buy a product or service....more on Market penetration
Matched bargain
Trading systems in which investors’ offers to buy and sell securities are directly matched with each other rather than through market makers....more on Matched bargain
MBO
The acquisition of a business by (a consortium including) its existing management....more on MBO
An investment strategy that follows fixed rules rather than using human judgement to make (or even approve) buy and sell decisions....more on Mechanical investing
Mechanical royalties
Royalties paid to a music publisher, composer or songwriter by a person making a recording....more on Mechanical royalties
Media convergence
The technology driven unification of different media channels, for example the delivery of audio and video over the Internet....more on Media convergence
Media Fragmentation
The breaking up of the large audiences previously enjoyed by media channels as a result of technology increasing the choice available....more on Media Fragmentation
Median
The number from a series such that exactly half the numbers are less than it and half greater....more on Median
Merger
The combination of two or more companies, under circumstances that make it hard to identify which is really buying (in economic rather than legal terms)....more on Merger
The economically mineable part of the measured and indicated mineral resources....more on Mineral Reserves
Mineral Resources
A mineral resource is a concentration of material, not necessarily one that is economically viable to mine...more on Mineral Resources
Minority interests
Deduction made in a company's consolidated accounts for amounts attributable to minority shareholders in group companies....more on Minority interests
Minority shareholder
A shareholder, other than the majority shareholder, in a company that is controlled by a majority shareholder or group of connected shareholders....more on Minority shareholder
MIRR
MIRR is a variant of IRR which has several advantages including a single answer and a more sensible reinvestment assumption....more on MIRR
Mode
The most frequently occurring number in a set of numbers....more on Mode
Modified duration
Modified duration is a measure of the sensitivity of a bond price to interest rates....more on Modified duration
Modified internal rate of return
MIRR is a variant of IRR which has some advantages. MIRR gives a single answer compared with the IRR which may give multiple answers....more on Modified internal rate of return
Modigliani-Miller theory
An alternative name for capital structure irrelevance: the theory that a company's capital structure does not affect its total value....more on Modigliani-Miller theory
Momentum Investing
A simple investment strategy that assumes price will continue any strong current trends....more on Momentum Investing
The amount of money in an economy: physical cash and various types of bank and non-bank deposits depending on the exact definition...more on Money supply
Monoline insurer
An insurer that has a single line of business that, in a financial markets context, is insuring bond repayments....more on monoline insurers
Monopoly
A market in which there is only one supplier of a product or service....more on Monopoly
Monopsony
A market in which there are multiple suppliers but only one buyer....more on Monopsony
Monte-Carlo simulation
A useful technique for financial modelling that uses random inputs to model uncertainty....more on Monte-Carlo simulation
Moral hazard
Refers to the likelihood of a person or organisation willing to take on more risk as they are covered by insurance....more on Moral hazard
Unit trust; a common type of collective investment vehicle....more on Mutual funds
MVNO
A company that provides mobile phone telecoms without owning its own network by buying capacity in bulk and reselling it retail....more on MVNO
Naked PE
A long term , sector relative PE ratio, with a further adjustment for company size....more on naked PE
Nash equilibrium
In game theory, a situation in which no player has an incentive to change their strategy....more on Nash equilibrium
Natural gas
A gaseous mixture of hydrocarbon compounds; usually found together with oil but the proportion of oil to gas varies from field to field....more on Natural gas
Natural monopoly
A monopoly that arises from the nature of the industry, rather than being imposed by law or resulting from anti-competitive practices....more on Natural monopoly
NAV
The total value of a company’s assets less the total value of its liabilities, divided by the number of shares in issue....more on NAV
Net Operating Profit After Tax. The profit made for all providers of capital, both shareholders and debt holders....more on NOPAT
Normal distribution
Also called the Gaussian distribution, is the commonest of the many probability distributions....more on Normal distribution
Normal market size
A quantity set per security by the London Stock Exchange; the minimum size of transactions up to which market maker quotes must be good for....more on Normal market size
Notes to accounts
More detailed disclose and explanations of the numbers in the financial statements....more on Notes to accounts
NPV
The current value of a stream of future cash flows, negative or positive....more on NPV
OEIC
Open Ended Investment Company: a type of collective investment fund that is incorporated but open ended....more on OEIC
Ofcom
The UK regulator of the broadcasting and telecommunications industries....more on Ofcom
The lowest price at which a seller is willing to sell a particular security. This is therefore the price at which the security can be bought....more on Offer price
Official List
The list of all securities whose trading on UK financial exchanges has been approved by the UK Listing Authority....more on Official List
Ofgem
The UK regulator of the gas and electricity industries...more on Ofgem
Ofwat
The UK regulator of the water industry...more on Ofwat
Oil reserves
The amount of oil or gas that has been discovered and that can be extracted profitably, classified by the probability of successful extraction....more on Oil reserves
Oligopoly
Where an oligopoly exists, a few large suppliers dominate the market resulting in a high degree of market concentration....more on Oligopoly
Oligopsony
Oligopsony exists when a few large buyers dominate a market....more on Oligopsony
OPEC basket price
A basket of seven crude oil prices, to which OPEC has tied its production activity....more on OPEC basket price
Open offer
Entitles shareholders to buy shares in proportion to existing entitlements, but this right is not transferable....more on Open offer
Open outcry
The traditional method of trading by writing offers on a board and shouting out offers to other dealers....more on Open outcry
Operating cash flow ÷ current liabilities; a measure a company's ability to pay its short term liabilities....more on Operating cash flow ratio
Operating lease
A lease on terms under which the lessor retains the risks and rewards of ownership. Any lease that is not a finance lease....more on operating and finance leases