Income bond - Generally income bonds promise to repay principal but to pay interest only when earned. In some cases unpaid interest on an income bond may accumulate as a claim against the corporation when the bond becomes due. An income bond may also be issued in lieu of preferred stock.

Indenture - A written agreement under which bonds and debentures are issued, setting forth maturity date, interest rate and other terms.

Independent broker - Member on the floor of the NYSE who executes orders for other brokers having more business at that time than they can handle themselves, or for firms who do not have their exchange member on the floor.  

Index A statistical yardstick expressed in terms of percentages of a base year or years. For instance, the NYSE Composite Index of all NYSE common stocks is based on 1965 as 50. An index is not an average.

Individual Benefit Statement - An individual benefit statement provides information about a participant’s retirement benefits, such as the total plan benefits earned and vested benefits, on a periodic basis. Additional information may be included depending upon the type of plan, such as how a 401(k) plan account is invested.

Individual Retirement Account (IRA) - An individual account set up with a financial institution, such as a bank or a mutual fund company. Under Federal law, individuals may set aside personal savings up to a certain amount, and the investments grow, tax deferred. In addition, defined contribution plan participants can transfer money from an employer retirement plan to an IRA when leaving an employer. IRAs also can be part of an employer plan.

Intrapreneur -  An inside entrepreneur, or an entrepreneur within a large firm, who uses entrepreneurial skills without incurring the risks associated with those activities. Intrapreneurs are usually employees within a company who are assigned a special idea or project, and are instructed to develop the project like an entrepreneur would. Intrapreneurs usually have the resources and capabilities of the firm at their disposal. The intrapreneur's main job is to turn that special idea or project into a profitable venture for the company.

Roth IRA - An Individual Retirement Account that allows taxpayers to contribute up to $2,000 per year, and to withdraw the principal and earnings totally tax-free under certain conditions. Unlike a traditional IRA, a taxpayer cannot take a tax deduction for his or her contributions to a Roth IRA plan. Unlike payments that are withdrawn tax-free from a Roth IRA plan, payments withdrawn from a traditional IRA plan are fully taxable as income.

Inflation Protection - A policy option that automatically increases benefits to help pay for expected increases in the cost of long-term care. Two types of protection, simple or compounded, are often available; both are typically based on an inflation rate of 5% per year.

The simple method increases benefit amounts by 5% of the original amount each year. This method is less expensive, but it is also one of the least effective, especially if you don't expect to use benefits until 20 or 30 years from now. For example, in 30 years using the simple method, a $5,000 monthly benefit (today's average cost for a nursing home) will grow to $12,500 per month.

However, long-term care costs actually increase about 5% compounded annually - that is, each year's costs have been 5% higher than the prior year's cost, not 5% higher than some original cost. At 5% compounded annually, today's $5,000 monthly cost for a nursing home will grow to $21,610 in 30 years, leaving a shortage of $9,110 to pay out-of-pocket every month if you pick a policy with only simple inflation protection.

Caution - to reduce premium costs, some of the newest policies increase benefits based on the Consumer Price Index (CPI), compounded annually. As it turns out, this method can be even worse than the simple method. The insurance companies use the Consumer Price All Items Index - the one we hear about on radio and TV. Unfortunately, some components of the All Items Index have a higher inflation rate than others - one of those is the cost of long-term care.

Over the past 10 years, the CPI averaged only 2.5% compounded annually. But, the cost of long-term care actually increased 5% compounded annually. Using the 2.5% rate, in 30 years, today's $5,000 monthly benefit will grow to only $10,488, leaving a shortage of $11,122 per month to pay out-of-pocket because the policy had insufficient protection against inflation.

Inheritance Tax - A tax that is levied by a state or local government upon those who inherit property; paid by the recipient. 

Initial public offering - IPO The first sale of stock by a company to the public.

Institutional investor - An organization whose primary purpose is to invest its own assets or those held in trust by it for others. Includes pension funds, investment companies, insurance companies, universities and banks.

Interest - Payments borrowers pay lenders for the use of their money. A corporation pays interest on its bonds to its bondholders. 

Intermarket Trading System (ITS) - An electronic communications network now linking the trading floor of seven registered exchanges and the NASD to foster competition among them in stocks listed on either the NYSE or AMEX and one or more regional exchanges. Through ITS, any broker or market maker on the floor of any participating market can reach out to other participants for an execution whenever the nationwide quote shows a better price is available.

Interrogation device - A computer terminal that provides market information - last sale price, quotes, volume, etc. - on a screen or paper tape.

Inter Vivos Trust - A revocable trust created during someone's lifetime to hold assets during that person's lifetime, thereby removing those assets from probate at death; also called a living trust.

Intestate - Dying without a legal will.

Inverted Yield Curve - When short-term interest rates are higher than long-term rates. This is considered to be a predictor of an economic downturn. Normally, long-term interest rates are higher than short-term rates.

Investment - The use of money for the purpose of making more money, to gain income, increase capital, or both.

Investment banker - Also known as an underwriter. The middleman between the corporation issuing new securities and the public. The usual practice is for one or more investment bankers to buy outright from a corporation a new issue of stocks or bonds. The group forms a syndicate to sell the securities to individuals and institutions. Investment bankers also distribute very large blocks of stocks or bonds - perhaps held by an estate.

Investment Company - A company or trust that uses its capital to invest in other companies. There are two principal types: the closed-end and the open-end, or mutual fund. Shares in closed-end investment companies, some of which are listed on the New York Stock Exchange, are readily transferable in the open market and are bought and sold like other shares. Capitalization of these companies remains the same unless action is taken to change, which is seldom. Open-end funds sell their own shares to investors, stand ready to buy back their old shares, and are not listed. Open-end funds are so called because their capitalization is not fixed; they issue more shares as people want them.

Investment counsel - One whose principal business consists of acting as investment advisor and rendering investment supervisory services.

Investment Grade - The two major rating agencies, Moody's Investors Service and Standard & Poor's, evaluate the financial strength of bond issuers and assign safety ratings to them. Bonds rated at or above "Baa" by Moody's Investors Service, or "BBB" by Standard & Poor's are referred to as investment grade bonds. Bonds that are rated lower are commonly referred to as junk bonds.

Investment Vehicle - In general, any method by which to invest.  This term is used very broadly. It refers to anyplace you can put your money. For example: stocks, bonds, mutual funds, options, futures, etc.

You'll often hear it used in sentences like this: "Mutual funds are a good investment vehicle for beginning investors who aren't confident enough to pick stocks themselves."

IPO - See Initial Public Offering.

IRA See Individual Retirement Account.

Irrevocable Trust - A trust that, once executed, cannot be revoked or changed without the consent of the beneficiary.

Issue - Any of a company's securities, or the act of distributing such securities.