IET
Interest Equalization Tax

IMM
International Monetary Market at the Chicago Mercantile Exchange

Immunization
A process for designing fixed income portfolios to obtain a target rate of return over a specified time period, within a narrow range, despite market conditions.

Imperfect Hedge
Unequal price changes on the two sides of a hedged position during a hedge period; an ex post description, it may result from a favorable or unfavorable basis change.

Implied Yield
A forecasted yield derived from present yields and based on the theory that the yield curve on one day is an excellent prediction of itself in the future.

In and Out
Denotes a transaction quickly turned over. A security has been bought and sold (or vice versa) on the same day.

In Competition
A situation in which two or more dealers compete for the purchase, sale or swap of bonds by an account, with implicit agreement that the execution will be awarded to the dealer who provides the most advantageous price to the account. Ties are generally decided by the flip of a coin or by resubmission of proposals.

In Hand
An expression having the same meaning as "firm" when applied to an offering or bid.

In syndicate
Refers to a new issue that is still subject to the price and trading restrictions as set forth in the Agreement Among Underwriters.

Income
Money earned on a security from interest or dividends.

Income Bond
A bond which is guaranteed as to principal but for which interest payments are a contingent obligation, required only if earned and then consented to by the board of directors. Failure to pay interest does not constitute default. Income bonds trade flat.

Incomes Policy
Any governmental policy to directly influence or regulate prices, wages, profits, or dividends. Methods may range from gentle "jawboning" to rigid price and wage freezes.

IND
Chicago Mercantile Exchange

IND%
Refers to percent of asset clarification (i.e., Cash and Case Equivalents, Bond, Equities).

Indenture
For debt securities, the contract that specifies all legal obligations of the issuer with respect to the securities and any qualifications or restrictions that may exist. The indenture names a trustee which holds the indenture, supervises payments of principal and interest to the security holders, and acts on behalf of the holders in the event of a default or other violation of the indenture's provisions.

Index
A statistical yardstick composed of a basket of securities with a set of characteristics. An example of this would include the "S&P 500" which is an index of 500 stocks.

Index Fund
An account comprised of securities; the characteristics of which will produce a return which will replicate a designated securities index. (i.e., Stocksplus and S&P 500)

Index-Linked Bond
A bond whose coupon payments are a function of some index. For example, coupons on index-linked gilts are linked to the Retail Price Index.

Inflation
A general rise in prices, usually measured by changes in prices of major indices, such as the Consumer Price Index. An increase in a particular price may or may not be inflationary, depending on how it affects other prices and on how promptly it brings to market additional supplies of a product. As of December 2001, the year-over-year percentage change in the CPI was 1.9%, which in historical terms is a modest rate of inflation.

Inflation Index Bond
Fixed income securities whose principal value is periodically adjusted according to the rate of inflation. The interest rate on these bonds is fixed at issuance, but over the life of the bond this interest is paid on an increasing principal value, which has been adjusted for inflation.

Initial Margin
The amount of margin required in order to establish a position in a futures contract.

Inside Market
The market defined by the highest actual bid and the lowest actual offering. An inside market may be tighter than a particular trader's market.

Institutional Pot
The percentage ( usually 20%) of a new issue offering which is set aside by the managers for large institutional orders.

Int. B/S
Refers to interests bought or sold.

Interest
An amount charged to a borrower by a lender for the use of money, normally expressed in terms of an annual percentage rate of the principal amount.

Interest Calculations
Current Yield: this is simply the annual coupon rate divided by the clean price of the bond.

ISMA Yield: a standard yield to maturity calculation recommended by the ISMA (formerly AIBD). Yield is compounded annually regardless of the coupon frequency.

SABE: Semi-Annual Bond Equivalent Yield; a method of converting yields and other measures of value in order to place them on a comparable basis. This method assumes interest is reinvested semi-annually. SABE is often applied to discount securities in order to compare their rate of return to the yield to maturity on coupon bonds.

Simple Yield: a modified version of the current yield that accounts for a deviation in a bond's clean price from par. Any capital gain or loss is assumed to occur uniformly over the life of the bond.

U.S. Street Method: The standard yield to maturity calculation used in the United States by market participants other than the U.S. Treasury. Yield is compounded semi-annually regardless of the coupon frequency. If the value date does not fall on a coupon date, the present value of the bond on the next coupon date is discounted over the fractional period with compound interest.

U.S. Treasury Method: The yield to maturity used by the U.S. Treasury to price bonds at auction. Partial periods are discounted using simple rather than compound interest.

Yield to Average Life: A yield which assumes the entire issue amount matures on the average life date rather than the maturity date. This is a quick-and-dirty method for comparing bonds with sinking funds with straight issues.

Yield to Equivalent Life: The discount rate that equates the present value of the future cash flows to the dirty price where the cash flows take into account the bond's amortization schedule. This calculation is appropriate for sinking funds; however, it is rarely used because of its complexity.

Yield to Maturity: The yield if the bond is held to maturity. This is the most frequently used measure of value for a bond. Generally, the calculation is a function of coupon payments, dirty price, and the method for discounting coupons and the redemption value. However, the exact functional form is determined by market or dealer conventions.

Interest Equalization Tax (IET)
A special tax that was once imposed by the United States Government on interest and other income from certain foreign securities in order to discourage the offering of such securities in the United States.

Interest-Rate Risk
When interest rates rise, the market value of fixed-income securities (such as bonds) declines. Similarly, when interest rates decline, the market value of fixed-income securities increases.

Interest Rates
The percentage paid as a fee for the use of money, expressed as an annual percentage of the principal amount. Influenced by a variety of factors including economic growth, inflation, supply/demand and international factors.

Interest Receivable
Interest income impacts the portfolio as soon as it is earned. Income is posted to cash automatically on payment date except in the case of mortgage a pass-through, where we post based on actual bank receipts.

Interest Yield Equivalent (IYE)
A measurement of the rate of return on a security sold on a discount basis that assumes actual days to maturity and a 360-day year.

Interim Experience
The rate of prepayments that are made between two specific points in time after a pass-through security has been issued- for example, the experience for the latest three months.

Interim Financing
Financing during the time from project commencement to closing of a permanent loan, usually in the form of a construction loan and/or development loan.

Intermediate
A bond with a maturity of intermediate length. Depending on the particular market, the range for this length may vary. In the corporate bond market, and intermediate would have a maturity between 1 and 12 years.

Inventory Valuation Adjustment (IVA)
A statistical estimate of what part of the national increase in the book value of inventories results merely from replacing identical items at higher or lower cost. The IVA is subtracted from the book value increase to obtain the inventory change component of the GNP.

Investment
The utilization of money in the expectation of future returns in the form of income or capital gain.

Investment Act of 1940
Legislation passed by Congress to insure that those investing in investment companies are fully informed and fairly treated. It requires that all publicly held companies register with the SEC.

Investment Banker
An individual or firm engaged in the financing of capital. the investment banker is the middleman between the issuer of new securities and the investor. He/she facilitates the conversion of savings into investment.

Investment Grade
Bonds rated in the top four rating categories (AAA, AA, A, BBB) are commonly known as investment grade securities and are considered eligible for bank investment under present commercial bank regulations issued by Comptroller of the Currency.

ISITC
The Industry Standards for Institutional Trade Communication committee, a group of U.S. banks and investment managers formed to develop and maintain standards used for securities message communication among participants in the U.S. securities.

ISMA
International Securities Market Association ( Formerly, Association of International Bond Dealers)

Issue Bid
A bid to purchase securities at the initial offering price.

IT
Information Technology

IVA
Industrial (or INDU)

IYE
Interest Yield Equivalent