IRR
The discount
rate which forces the PV of a project's inflows to equal the PV of its
costs.
Improper
Accumulation
Retention
of earnings by a business for the purpose of enabling stockholders to
avoid personal income taxes.
Income
Bond
A bond
that pays interest only if the interest is earned.
Income
Statement
A statement
summarizing the firm's revenues and expenses over an accounting period,
generally a quarter or a year.
Incremental
Cash Flow
The net
cash flow attributable to an investment project.
Indenture
A formal
agreement between the issuer of a bond and the bondholders.
Independent
Projects
Projects
whose cash flows are not affected by the acceptance or nonacceptance
of there projects.
Indexed
(Purchasing Power) Bond
A bond
that has interest payments based on an inflation index so as to protect
the holder from inflation.
Inflation
The tendency
of prices to increase over time.
Inflation
Premium (IP)
A premium
equal to expected inflation that investors added to the real risk-free
rate of return.
Inflow
A cash
receipt.
Information
Content (Signaling) Hypothesis
The theory
that investors regard dividend changes as signals of management's earnings
forecasts.
Initial
Public Offering (IPO) Market
The market
consisting of stocks of companies that are in the process of going public.
Interest
Rate Parity
Specifies
that investors should expect to earn the same return in all countries
after adjusting for risk.
Interest
Rate Risk
The risk
of capital losses to which investors are exposed because of changing
interest rates.
Interest
Rate Risk
The risk
of a decline in a bond's price due to an increase in interest rates.
Internal
Rate of Return (IRR) Method
A method
of ranking investment proposal using the rate of return on an investment,
calculated by finding the discount rate that equates the present value
of future cash inflow s to the project's cost.
Intrinsic
Value,^Po
The value
of an asset that, in the mind of a particular investor, is justified
by the facts;^Po may be different from the asset's current market price,
its book value, or both.
Inventory
Turnover Ratio
The ratio
calculated by dividing sales by inventories.
Inverse
Floater
A note
in which the interest paid moves counter to market rates.
Inverted
("Abnormal") Yield Curve
A downward-sloping
yield curve.
Investment
Banking House
An organization
that underwrites and distributes new investment securities and helps
businesses obtain financing.
Investment
Grade Bonds
Bonds
rated triple-B or higher; many banks and other institutional investors
are permitted by law to hold only investment grade bond.
Investment
Opportunity Schedule (IOS)
A graph
of the firm's investment opportunities ranked in order of the projects'
rates of return.
Investment
Opportunity Schedule (IOS)
A graph
of the firm's investment opportunities ranked in order of the projects'
rates of return.
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