See: Efficient Market Theory; Market Analysis

Inflation
The persistent and appreciable rise in the prices of goods and services. Moderate inflation is normally associated with periods of expansion and high employment--increasing dollars chasing a dwindling supply of goods. Hyperinflation, when prices rise 100% or more a year, causes people to lose confidence in the currency. During inflationary times, people often divert their investments into real estate and gold because they usually retain their value.

See: Base Period; Demand-Pull Inflation; Goldbug; Hedging

Inflation Rate
Rate of price changes usually calculated on a monthly or annual basis. The Consumer Price Index and the Producer Price Index are two principle US indicators of inflation rates. They track changes in prices paid by consumers and producers.

See: Consumer Price Index; Inflation; Producer Price Index

Ingot
A bar of metal. Gold reserves of the Federal Reserve are stored in ingot form. Investors who purchase a precious metal may take delivery of an ingot.

Initial Margin Requirement
Initial dollar amount or marginable securities that a brokerage client is required to deposit with a broker before placing margin transactions--one in which the broker extends credit to the client in a margin account. The initial margin requirement, according to the Federal Reserve Board's Regulation T, is presently 50% of the purchase price (or $2000--whichever is higher) when buying marginable securities or 50% of the proceeds of a short sale.

See: Margin; Margin Account; Margin Call; Margin Requirement; Margin Security; Regulation T; Selling Short

Initial Public Offering (IPO)
The first public issuance of stock from a company that has not been publicly traded before.

See: Going Public; Hot Issue; Publicly Held; Underwriting; Venture Capital

In Play
A security whose price fluctuates because of takeover rumors or activities.

See: Garbatrage; Rumortrage; Takeover

Inside Information
Material corporate information that has not yet been made public in a widely used medium. Use of this information would influence the purchase or sale of a company's security. An example of inside information is a company who has a large quarterly loss and this fact has not yet been made public. If this information was used to trade the security, under SEC rules, it may be deemed as illegal.

See: Insider; Securities and Exchange Commission

Inside Market
Bid and asked quotes at which one dealer will buy from or sell to another--also called "wholesale" or "interdealer market". In contrast, retail market quotes are the prices that customers pay to dealers to buy or sell a security.

See: Asked Price; Dealer; Inside Quote

Inside Quote
The highest bid to buy and the lowest offer to sell a security at a given time. If one asks for a "quote" on a stock, you will receive something like "15 1/4 to 15 1/2." This means that $15.25 is the highest price any buyer willing to pay and that $15.50 is the lowest price any seller will accept.

See: Firm Quote; Nominal Quotation

Insider
Anyone who is either an officer, director or key employee of a corporation, a person owning 10% of the company's stock (and their families), or anyone with inside (non-public) information.

See: Immediate Family; Inside Information; Rule 144

Insolvency
The inability of an individual or entity to pay its debts when they are due.

Installment Sale
A transaction that has a set contract price and is usually paid in monthly installments over a specified period.

Instinet
Abbreviation for the Institutional Networks Corporation.

See: Fourth Market

Institutional Broker
Broker who trades securities for institutional clients such as banks, mutual funds, pension funds and insurance companies.

See: Institutional Broker's Estimate System; Institutional Investor; Retail Investor

Institutional Broker's Estimate System (IBES)
A service provided by Lynch, Jones and Ryan. The brokerage firm gathers analysts' future earnings estimates on publicly traded companies and determines which companies' estimates have changed substantially.

See: Rating

Institutional Investor
A mutual fund, bank, pension fund, insurance company, university or other institution. Institutional investors usually invest large volumes in the securities markets.

See: Retail Investor

Instrument
A legal document that states a contractual relationship or that specific rights are granted such as notes, agreements or contracts.

See: Instrumentality

Instrumentality
Obligations of government agencies that are backed by the full faith and credit of the government. However, these obligations are not direct obligations of the government. Examples of such instumentalities are the Student Loan Marketing Association, Federal Intermediate Credit and Federal Land Banks.

See: Full Faith And Credit; Government Obligations

Insurance
Plan in which individuals and organization who are concerned about potential risks will pay premiums to an insurance company, who in return, will reimburse them if there is loss. To generate a profit, the insurer will invest the premiums it receives. Examples of the different types of insurance available are automobile, home, health and worker's compensation. Whereas in most cases the insured is paid for their loss, with life insurance a beneficiary is paid when the insured person passes away.

See: Beneficiary

Insured Account
Account at a brokerage firm, bank, savings and loan association or credit union that is insured either by a federal or private insurance organization. If the institution becomes insolvent, it protects depositors against losses. Brokerage accounts are insured by the Securities Investor Protection Corporation (SIPC). SIPC does not protect the investor from market declines. The Federal Deposit Insurance Corporation (FDIC) administers the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF)--insurance for bank and for savings and loan accounts.

See: Insolvency; Securities Investor Protection Corporation

Insured Bonds
Municipal bonds covered by an insurance policy. The policy guarantees that should the issuer default in making payments, the insurance company will pay all interest and prinicipal due. Insured bonds usually are rated very high as the risk to the investor is minimal.