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840 terms · page 17 of 35


A–Z
All A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
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)
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 %