Secured Loans
Incremental internal rate of return
Internal rate of return (I.R.R.) on the incremental investment from choosing a
large project instead of a smaller project.
Indenture
Agreement between lender and borrower which details specific terms of the bond
issuance. Specifies legal obligations of bond issuer and rights of bondholders.
Document spelling out the specific terms of a bond as well as the rights and
responsibilities of both the issuer of the security and the holder.
Independent project
A project whose acceptance or rejection is independent of the acceptance or
rejection of other projects.
Index
Often applies to derivative products. Statistical composite that measures
changes in the economy or in financial markets, often expressed in percentage
changes from a base year or from the previous month. Most relevantly, indices
measure the ups and downs of stock, bond , and some commodities markets,
reflecting market prices and weighing of the companies on the index.
Index and Option Market (IOM)
A division of the C.M.E. established in 1982 for trading stock index products and
options. Related: Chicago Mercantile Exchange (C.M.E.).
Index arbitrage
An investment/trading strategy that exploits divergences between actual and
theoretical futures prices. For example, the simultaneous buying (selling) of stock
index futures (i.e., S&P 500) while selling (buying) the underlying stocks of that
index, capturing as profit the temporarily-inflated basis between these two
baskets. Often, the point where profitability exists is expressed at the block call
as a number of points the future must be over or under the underlying basket for
an arbitrage opportunity to exist. See: program trading
Indexed bond
Bond whose payments are linked to an index, e.g. the consumer price index.
