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Orders, Execution & Market Structure

Iceberg Order

A large order that reveals only a small portion to the order book at a time, refreshing as each slice is filled.

Test: total quantity exceeds the disclosed quantity, and a fresh slice enters the book only after the previous one is fully executed qualitative
Indicators & Oscillators

Ichimoku Cloud

A multi-line system plotting conversion and base lines, a shaded cloud projected forward, and a lagging span behind price.

Conversion Line = (9-period High + Low) / 2; Base Line = (26-period High + Low) / 2; Leading Span A = average of those two, plotted 26 periods ahead; Leading Span B = (52-period High + Low) / 2, plotted 26 periods ahead
Funds, ETFs & Index Investing

IDCW Option

The plan option under which a fund periodically distributes part of the NAV to unit holders as income distribution cum capital withdrawal.

Post-Payout NAV = Pre-Payout NAV - Amount Distributed per Unit
Market Psychology & Behavioural Finance

Illusion of Control

The belief that one can influence outcomes that are largely determined by chance.

Test: confidence in a favourable outcome rises with involvement or effort, without any change in the actual probability qualitative
Orders, Execution & Market Structure

Immediate-or-Cancel Order

An order that executes whatever quantity is available at once and cancels the remainder rather than resting in the book.

Test: any unfilled quantity is cancelled immediately on submission instead of joining the order book qualitative
Orders, Execution & Market Structure

Impact Cost

The cost, expressed as a percentage, of executing a stated order size against the current order book relative to the mid price.

Impact Cost % = (Actual Execution Price - Ideal Mid Price) / Ideal Mid Price x 100 %
Fundamental Analysis & Valuation

Impairment

A write-down of an asset's carrying value when its recoverable amount falls below what the balance sheet records.

Impairment Loss = Carrying Amount - Recoverable Amount, where Recoverable Amount is the higher of fair value less costs to sell and value in use ₹ crore
Derivatives, Futures & Options

Implied Volatility

The volatility figure that, put into an option pricing model, reproduces the option's current market price.

Test: solve the pricing model for the volatility input that makes the model price equal the observed market price %
Derivatives, Futures & Options

In the Money

An option that would have positive value if exercised immediately.

Call: Spot > Strike; Put: Spot < Strike qualitative
Funds, ETFs & Index Investing

iNAV

The indicative net asset value of an ETF, computed and published continuously through the trading day.

iNAV = (Live Value of the Underlying Basket + Cash Component) / Units Outstanding
Corporate Actions, Dividends & Governance

Independent Director

A board member with no material pecuniary relationship with the company, its promoters or its management.

Test: the director meets the statutory independence criteria on relationships, remuneration and tenure, and is so declared annually qualitative
Funds, ETFs & Index Investing

Index

A rule-based measure of the value of a defined group of securities, used to represent a market or segment.

Index Value = (Current Free-Float Market Capitalisation of Constituents / Base Market Capitalisation) x Base Index Value index points
Funds, ETFs & Index Investing

Index Fund

A mutual fund that seeks to replicate an index's holdings and return rather than to beat it.

Test: the fund holds constituents in index proportions and measures itself by tracking difference rather than by outperformance qualitative
Derivatives, Futures & Options

Index Futures

A futures contract whose underlying is a stock market index rather than a single security.

Contract Value = Index Level x Lot Size; settlement is in cash against the final index value
Economy, Macro & Market Cycles

Index of Industrial Production

A monthly index measuring the volume of output in mining, manufacturing and electricity.

IIP = weighted average of production indices for mining, manufacturing and electricity, against a base year index points
Funds, ETFs & Index Investing

Index Rebalancing

The periodic revision of an index's constituents and weights according to its published rules.

Test: constituents are reviewed on a stated schedule against eligibility criteria, with additions and deletions announced in advance qualitative
Funds, ETFs & Index Investing

Index Weighting

The rule determining how much of an index each constituent represents.

Free-Float Weight = Constituent's Free-Float Market Capitalisation / Sum of All Constituents' Free-Float Market Capitalisations %
Indian Market, Regulation & Taxation

Indexation Benefit

An adjustment that raises an asset's cost of acquisition for inflation before computing a long-term capital gain.

Indexed Cost = Cost of Acquisition x (Cost Inflation Index of the Year of Sale / Cost Inflation Index of the Year of Purchase)
Indian Market, Regulation & Taxation

India VIX

An index measuring the volatility the market expects in the Nifty over the next 30 days, derived from Nifty option prices.

Computed from the order book of near and next-month Nifty options, expressed as an annualised percentage %
Indicators & Oscillators

Indicator Lag

The delay between a change in price and the corresponding change in an indicator derived from it.

Approximate lag of a simple moving average = (n - 1) / 2 periods, where n is the lookback days
Economy, Macro & Market Cycles

Inflation

A sustained rise in the general price level, which reduces what each rupee can buy.

Inflation Rate = (Current Price Index - Prior Year Price Index) / Prior Year Price Index x 100 %
Risk & Portfolio Management

Inflation Risk

The risk that rising prices erode the purchasing power of an investment's returns.

Real Return = (1 + Nominal Return) / (1 + Inflation Rate) - 1 %
Bonds & Fixed Income

Inflation-Indexed Bond

A bond whose principal is adjusted for inflation, so both the coupon and the redemption amount rise with prices.

Adjusted Principal = Original Principal x (Current Index Value / Index Value at Issue); Coupon = Adjusted Principal x Real Coupon Rate
Risk & Portfolio Management

Information Ratio

Return above a benchmark per unit of tracking error.

Information Ratio = (Portfolio Return - Benchmark Return) / Tracking Error ratio (x, times)