Financial Terms and Definitions » I

Interest Rates

ashivapu — Sat, 03 Oct 2009 23:04:07 +0000

A rate which is charged or paid for the use of money.

For example, a home owner must pay interest rates on a loan they borrowed from the bank. If they borrowed $400,000, then they will be required to pay back $400,000 plus any interest rates that have occurred.

Interest rates are generally a percentage that is charged to the overall amount. Charges can be daily, weekly, annually, or whatever the parties decide. People with bad credit scores will ultimately have to pay higher interest rates.

IRA

ashivapu — Sat, 03 Oct 2009 03:12:33 +0000

An investment retirement account (IRA) is an investing tool used by individuals to create funds for retirement savings. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs. Related posts:Traditional IRA Roth IRA Investment Bank Related posts:

Investment Bank

ashivapu — Sat, 03 Oct 2009 03:10:29 +0000

An individual or institution which offers advisory services to investors. Most also maintain broker/dealer operations, maintain markets for previously issued securities.

Investment banks also have a large role in facilitating mergers and acquisitions (M&S), private equity placements and corporate restructuring. Unlike traditional banks, investment banks do not accept deposits from and provide loans to individuals.

Inventory

ashivapu — Sat, 03 Oct 2009 03:08:07 +0000

A company’s merchandise, raw materials, and finished and unfinished products which have not yet been sold.

Items in the inventory are considered liquid assets, since they can be converted into cash quite easily. There are various means of valuing these assets, but to be conservative the lowest value is usually used in financial statements.

Inflation

ashivapu — Fri, 02 Oct 2009 21:52:49 +0000

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Inflation is usually a cause of money supply increasing faster than the economy.

The Consumer Price Index (CPI) is a good measurement of inflation.

Initial Public Offering (IPO)

ashivapu — Fri, 02 Oct 2009 06:56:29 +0000

An initial public stock offering (IPO) is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.

In an IPO the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.