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	IDA See Investment Dealers Association of Canada IFIC See Investment Funds Institute of Canada ILLIQUID INVESTMENT Any investment that may be difficult to sell quickly at a price close to its market value. An investment that is not readily convertible into cash, such as a stock, bond, or commodity that is not traded actively and would be difficult to sell at once without taking a large loss. IMF See International Monetary Fund INCOME Cash received (and accrued). Sources include employment compensation, business earnings, rent collected, investment returns and pensions. INCOME AND EXPENSE STATEMENT A financial statement showing and comparing a company’s income and expenses, resulting in either a surplus or a shortfall over a stated time period. INCOME DEFERRAL Postponing the taxation of income until a point in the future. INCOME FUNDS These are investment funds that invest primarily in fixed-income securities such as bonds, mortgages and preferred shares. Their primary objective is to produce a steady flow of income for investors while preserving capital. INCOME SPLITTING The process of diverting taxable income from an individual in a high tax-bracket to one in a lower tax bracket. INCOME STATEMENT A summary of the revenues, costs and expenses of a company during an accounting period; also called a profit and loss statement. INCOME STOCKS Stocks of stable companies that have a low to moderate risk and represent relatively conservative investments. Income stocks tend to be in stable service industries, such as telecommunications and utilities that can offer both higher-than-average dividend payments and the possibility of capital appreciation. INCOME TAX ACT (ITA) The legislation dictating the process and collection of federal tax in Canada, administered by the Canada Customs and Revenue Agency. INCOME TRUST Investment that is structured as a trust, such that it invests in income-producing assets, such as resource properties (oil, gas and mining), or businesses where the revenues, net of expenses, are distributed to investors. INDEX Indicator providing a representation of the value of the securities that constitute it. Indices often serve as barometers for a given market or industry and benchmarks against which financial or economic performance is measured. INDEX FUND An investment fund that matches its portfolio to those of a specific financial market index, with the objective of duplicating the general performance of the market in which it invests. INDEXING The act of tying wages, taxes or other payments and rates to an index. For example, a labour contract may call for indexing wages to the Consumer Price Index to protect against the loss of purchasing power in a time of rising inflation. IN ESCROW Documents, real estate, money or securities deposited with a neutral third party (the escrow agent) to be delivered upon fulfillment of certain conditions as contained in a written contract. INFLATION The average rate of increase in prices. When economists speak of inflation as an economic problem, they generally mean a persistent increase in the general price level over a period of time, resulting in a decline in a currency's purchasing power. Inflation is usually measured as a percentage increase in the Consumer Price Index (CPI). Canada's inflation target, as set out by the federal government and the Bank of Canada, aims to keep inflation within a range of 1 to 3 per cent. If the rate of inflation is 10 per cent a year, $100 worth of purchases last year will, on average, cost $110 this year. At the same inflation rate, those purchases will cost $121 next year, and so on. INFLATION RATE RISK The risk that the value of financial assets and the purchasing power of income will decline due to the impact of inflation on the real returns produced by those financial assets. INFORMATION RATIO The information ratio is the amount of excess return of an investment portfolio generated per unit of risk or tracking error added. IN KIND This is the exchange of securities instead of cash. Often referred to as payment in kind. INITIAL PUBLIC OFFERING (IPO) Also known as an "IPO." When a private company "goes public" it offers shares on the market for the first time through an initial public offering. INPUT TAX CREDITS The input tax credit mechanism under the GST provides a refund to registered businesses of all GST paid on inputs involved in the production and sale of taxable goods and services. In this manner, the input tax credit minimizes the amount of indirect tax embedded in the price of Canadian-produced goods and services, making them more competitive both internationally and in the domestic market. INSIDER All directors and senior officers of a corporation and those who may also be presumed to have access to inside information concerning the company; also anyone owning more than 10 per cent of the voting shares in a corporation. INSIDER REPORT A filed report of all transactions in the shares of a company by those considered insiders of the company. Reports are to be filed with applicable securities commissions by the tenth day of the month following the transaction, although in practice many insiders file much later without any action taken by regulators. INSTALLMENT DEBENTURES A bond or debenture issue in which a predetermined amount of principal matures each year. INSTALLMENT RECEIPTS Also known as Partially Paid Shares. The issuance of these are a growing trend in Canada where the seller of shares accepts installment payments, usually half up front and half one year later. It becomes controversial if the stock price drops and buyers don't honour their pledge to pay the second installment. INSURANCE COMPANY A financial institution - which may be either federally or provincially regulated - that engages primarily in the business of insuring risks. INTANGIBLE ASSET An asset having no physical substance. Most common intangible assets are goodwill, patents, franchises and copyrights. INTEREST The cost of borrowed money - the price that lenders charge borrowers for the use of the lender's money. Interest is paid on deposits because they are, in effect, loans to the bank or other deposittaking institutions. Interest is usually expressed as a rate per period of time, usually one year, in which case it is called an annual interest rate. INTEREST RATE OR NOMINAL INTEREST RATE The interest payable on a debt expressed as a percentage of the debt over a period of time (usually a year). If a loan's interest rate is 8% annually you pay $8 interest each year for every $100 borrowed. INTERNAL RATE OF RETURN (IRR) The growth rate of an investment over a time period relative to the amount invested. IRR, which compares the return to the amount invested, is expressed as a percent gain or loss for easy comparison with other percent changes for the same time period. The IRR calculation is based on continuous compounding. INTEREST RATE RISK The risk that changes in interest rates will adversely affect the value of an investor's portfolio. For example, a portfolio with a large holding of longterm bonds is vulnerable to significant loss from increases in interest rates. INTEREST RATE SWAP An exchange of two debt obligations that have different payment streams, usually consisting of a fixed interest rate stream and a floating interest rate stream. INTERNATIONAL MONETARY FUND (IMF) An agency of the United Nations established in 1944 along with the World Bank to promote economic recovery, development and trade principally by helping to ensure a stable system of international exchange. The IMF has evolved since its inception, but remains focused on overseeing the international monetary system, which includes promoting balance of payments stability, and encouraging member governments to implement appropriate macroeconomic and structural policies. INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS (IOSCO) An association consisting of 134 securities commissions. It aims to foster co-operation among members, promote high standards of securities regulation, facilitate the exchange of information, and encourage the establishment of standards and effective surveillance of international securities transactions. IN-THE-MONEY A call option is in the money if its strike price is below the current market price of the underlying security, resulting in a profitable situation. A put option is in the money if its strike price is above the current market price of the underlying security. The in-the-money amount is the option's intrinsic value. INTRINSIC VALUE The difference between the exercise price of an option and the current market price of the underlying security. INVERTED YIELD CURVE An uncommon situation in which long-term interest rates have lower yields than short-term interest rates. Normally, lenders receive a higher yield when committing their money for a longer period of time; this situation is called a positive yield curve. An inverted yield curve occurs when a surge in demand for short-term credit drives up short-term rates on instruments such as T-bills and other money market funds. INVESTMENT In its broadest sense, an investment consists of putting an asset into a form that is intended to increase its value. Essentially, an investment is the use of capital to create more money, either through income producing vehicles or through more risk-oriented ventures designed to result in capital gains. In an economic context however, it refers to spending on capital goods in order to increase output - building a new factory, purchasing new equipment or public spending on infrastructure. INVESTMENT ADVISER Investment counsel to an investment fund. Also may be the manager of an investment fund. See Investment counsel. INVESTMENT BANKER A bank or member of a bank whose primary function is to provide capital for companies and individuals to expand their wealth through investment. Investment bankers often assist in mergers and acquisitions and new securities issues. INVESTMENT COMPANY A corporation or trust whose primary purpose is to invest the funds of its owners, the shareholders. INVESTMENT COUNSEL A firm or individual that provides investment advice for a fee, usually a fixed percentage of the market value of the investments under management. INVESTMENT DEALER A securities firm or an individual associated with one. When underwriting new securities, or in most fixed income trading, the investment dealer will act as the principal, owning the securities bought and sold. INVESTMENT DEALERS ASSOCIATION (IDA) OF CANADA The Canadian investment industry's national trade association and self-regulatory organization. The IDA seeks to foster efficient capital markets by encouraging participation in the savings and investment process, and by ensuring the integrity of the marketplace for both domestic and foreign investors. INVESTMENT FUND See Mutual Fund INVESTMENT FUNDS INSTITUTE OF CANADA (IFIC) The mutual fund industry trade association set up to serve its members, co-operate with regulatory bodies, and protect the interests of the investing public that use mutual funds as a medium for their investments. IFIC offers the Canadian Investment Funds course. Upon completion of this course and passing the exam, a person can register with a Provincial Securities Regulator, join a mutual fund dealer and sell mutual funds. INVESTMENT-GRADE BOND A bond that is relatively safe, having a high bond rating such as BBB or above. See Credit Rating Agency. INVESTMENT INCOME The income received from an investment in both securities and property. Investment income includes rent from property, dividends from shares in corporations, coupon payments from bonds, and interest from guaranteed investment certificates, bank accounts, certificates of deposit and other financial securities. INVESTMENT PORTFOLIO The collection of assets you have that are not used for everyday living expenses or short-term expenditures. This portfolio may contain both taxable and tax-deferred investments. Examples of taxdeferred investments include RRSPs and RPPs. Examples of taxable investments include: GICs, money market accounts, savings accounts, mutual funds, stocks and bonds, annuities, real estate (other than your personal residences), collectibles, precious metals, futures and commodities. INVESTMENT TAX CREDIT A dollar for dollar reduction in tax liability that is calculated as a fixed percentage of qualifying investments in research and development. IOSCO: See International Organization of Securities Commissions. IPO See Initial Public Offering. IRR See Internal Rate of Return ISM (INSTITUTE FOR SUPPLY MANAGEMENT) INDEX Formerly known as the U.S. National Association of Purchasing Managers (NAPM) Index. It provides a measure of the health of the manufacturing sector, and more generally the overall economy, by surveying purchasing managers for data about new orders, production, employment, deliveries and inventory. ISSUE DATE The date on which a bond, insurance policy or stock offering is issued. ISSUED SHARES The portion of the authorized shares that have been actively sold to the public, and remain outstanding. ITA See Income Tax Act.