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Derivatives, Futures & Options

Initial Margin

The deposit required before a derivative position can be opened, held as collateral against potential losses.

Initial Margin = SPAN Margin + Exposure Margin, computed by the clearing corporation for the portfolio ₹ Market Basics & Instruments

Initial Public Offering

The first sale of a company's shares to the public, after which the shares are listed and traded on a stock exchange.

Total IPO size = Fresh Issue Amount + Offer for Sale Amount ₹ crore Corporate Actions, Dividends & Governance

Insider Trading

Trading in a company's securities while in possession of unpublished price-sensitive information about it.

Test: the person is an insider, possesses unpublished price-sensitive information, and trades or communicates it without a legitimate purpose qualitative Corporate Actions, Dividends & Governance

Insolvency and Bankruptcy Code

India's 2016 law establishing a time-bound process for resolving corporate insolvency or liquidating the company.

Test: on admission of a default, a resolution professional takes control and a resolution plan must be approved within the prescribed period or liquidation follows qualitative Financial Statements & Accounting

Intangible Assets

Identifiable non-physical assets such as software, patents, licences and trademarks that are expected to generate future benefits.

Carrying Value = Cost - Accumulated Amortisation - Accumulated Impairment ₹ crore Fundamental Analysis & Valuation

Interest Coverage Ratio

Operating profit divided by interest expense, measuring how many times over the company's earnings can pay its interest bill.

Interest Coverage = Operating Profit (EBIT) / Interest Expense ratio (x, times) Financial Statements & Accounting

Interest Expense

The cost of borrowed money charged to the profit and loss statement for a period.

Interest Expense = Average Borrowings x Effective Interest Rate ₹ crore Economy, Macro & Market Cycles

Interest Rate Cycle

The multi-year swing in policy and market interest rates between tightening and easing phases.

Test: policy rates move in a sustained direction across several meetings, reversing only after inflation or growth conditions change materially % Risk & Portfolio Management

Interest Rate Risk

The risk that changes in interest rates reduce the value of an investment or raise the cost of borrowing.

Approximate Price Change = -Modified Duration x Change in Yield % Corporate Actions, Dividends & Governance

Interim Dividend

A dividend declared by the board during a financial year, before the annual accounts are finalised.

Test: the dividend is declared by the board mid-year and paid before the annual general meeting approves the final accounts ₹ Funds, ETFs & Index Investing

International Fund

A fund giving Indian investors exposure to securities listed outside India.

Return in Rupees = (1 + Foreign Market Return) x (1 + Currency Change) - 1 % Market Basics & Instruments

Intraday Trading

Buying and selling the same security within a single trading session so that no position is carried overnight.

Test: the position is opened and closed within the same trading day, leaving a net quantity of zero at the close qualitative Fundamental Analysis & Valuation

Intrinsic Value

The value of a business justified by the cash it can be expected to produce over its life, discounted to today.

Intrinsic Value = Sum of Future Free Cash Flows discounted at the required rate of return ₹ Financial Statements & Accounting

Inventory

Goods held for sale, work in progress, and raw materials, carried at the lower of cost and net realisable value.

Inventory Days = Average Inventory / Cost of Goods Sold x 365 ₹ crore Fundamental Analysis & Valuation

Inventory Turnover Ratio

Cost of goods sold divided by average inventory, showing how many times stock is sold and replaced in a year.

Inventory Turnover = Cost of Goods Sold / Average Inventory; Inventory Days = 365 / Inventory Turnover ratio (x, times) Technical Analysis & Chart Patterns

Inverse Head and Shoulders

A formation of three troughs in which the middle trough is the lowest and the outer two are roughly level, joined by a neckline through the…

Neckline = line through the two highs between the troughs; conventional measured move = Head Depth below Neckline, projected up from the break qualitative Technical Analysis & Chart Patterns

Inverted Hammer

A candlestick with a small body near the bottom of its range and a long upper wick, appearing after a decline.

Test: Upper Wick is at least twice the Body, Lower Wick is minimal, and the candle follows a decline qualitative Bonds & Fixed Income

Inverted Yield Curve

A yield curve on which short-maturity yields exceed long-maturity yields.

Test: yield on a short maturity, such as two years, exceeds the yield on a longer one, such as ten years % Financial Statements & Accounting

Investing Cash Flow

The net cash used in or generated by buying and selling long-term assets and investments during a period.

Investing Cash Flow = Proceeds from Asset Sales + Investment Income - Capital Expenditure - Acquisitions - Investments Made ₹ crore Indian Market, Regulation & Taxation

Investment Adviser

A SEBI-registered professional who advises on securities for a fee and owes a fiduciary duty to the client.

Test: the person holds a SEBI registration as an investment adviser and charges a fee for advice rather than earning commission on products qualitative Bonds & Fixed Income

Investment Grade

A credit rating of BBB minus or above, indicating relatively low expected default risk.

Test: the rating is BBB- or higher on the standard scale qualitative Market Basics & Instruments

Investor

A market participant who buys securities for their expected long-term cash flows and business performance rather than for short-term price…

Test: the holding decision rests on the underlying business or issuer's economics, with a horizon measured in years qualitative Indian Market, Regulation & Taxation

Investor Protection Fund

A fund maintained by each exchange to compensate investors for losses arising from a defaulting trading member.

Test: the claim arises from a declared default of a trading member and falls within the compensation limit set by the exchange ₹ Indian Market, Regulation & Taxation

IPO Allotment

The process of distributing shares among applicants when an issue is subscribed, by lottery in the oversubscribed retail portion.

Test: in an oversubscribed retail portion, allotment is by lottery in minimum lots, so each application has an equal chance regardless of size qualitative