Glossary – Letter I

Idiosyncratic risk

The risk of incurring volatility or permanent loss of capital based on the unique circumstances of a security rather than general market movements.  This risk can be mitigated through diversification.

If, as and when

Indicates a conditional transaction in a security that is authorized for issuance, but not issued yet. New primary offerings can trade on an “if, as and when” issued basis prior to listing on an exchange.


The purchase and sale of the same security within a short period of time, usually a day, week or month. An in-and-out trader is more interested in profiting from day-to-day price fluctuations than in receiving dividends or long-term growth.

In-the-money option

A call option is in-the-money if its exercise or strike price is below the current market price of the underlying stock. A put option is in-the-money if its strike price is above the current market price of the underlying stock.

Included employment

Operation of any work, undertaking or business that is subject to the legislative authority of the Government of Canada, such as banking, telecommunications, inter- provincial transportation, etc.

Income bond

Generally, an income bond promises to repay principal but only to pay interest when the company earns a certain amount of money. In some cases, if the interest is unpaid on an income bond, it may accumulate as a claim against the company when the bond matures.

Income mutual fund

A mutual fund designed to produce current income for investors. Examples are government, mortgage-backed securities, and municipal and international bond funds. Equity-based funds can also have income as their investment objective, and include utilities income and equity income funds.

Income stock

A common stock that pays, or is expected to pay, an attractive dividend to shareholders.


A firm or company that has formed a legal corporation by completing the required procedures.

Index or Average

A statistical tool that measures the state of the stock market or the economy, based on the performance of stocks or other meaningful components. Examples are the TSE 300 Composite Index, The Montreal Exchange Market Portfolio Index and the Dow Jones Industrial Average.

Individual RESP Plan

An RESP that permits only one beneficiary. The beneficiary does not have to be related to the subscriber.


Industrials Sector

This includes manufacturers and suppliers of capital goods, commercial services and supplies, and transportation. Capital goods include aerospace and defence equipment, building products, construction and engineering contractors, electrical components and equipment, heavy electrical equipment, and construction, farm, and industrial machinery. Commercial services include commercial printing services, data processing services, employment services, office services and supplies, and environmental services. Transportation includes airfreight and couriers, airlines, marine transportation, railroads and trucking companies, and transportation infrastructure owners and operators.


The rise in prices of goods and services, generally a result of increased spending that exceeds the supply of goods on the market. Inflation is usually measured by the Consumer Price Index in Canada.

Inflation-control target

The target range established by the Bank of Canada and the federal government within which the Bank aims to contain annual inflation as measured by the rate of change in the >total CPI. The target range currently extends from 1 to 3 per cent.

Note: The Bank of Canada focuses on the core CPI in its policy deliberations.

Information Technology Sector

These companies include manufacturers of communications equipment, computers and peripherals, electronic equipment and instruments, office electronics, and semiconductor equipment and products. It also includes developers, producers and providers of software and services, including Internet services, information technology consulting and information management services, and application and systems software.

Initial purchase

The initial purchase is the smallest investment amount accepted for establishing a new account.

Initial RESP Year

Means the calendar year in which the plan is entered into except that, if an amount is transferred to the plan from another RESP that was entered into before the plan, it means the earliest of the calendar years in which each such RESP was entered into.


Directors, senior officers and any other people, such as lawyers and accountants, who can be presumed to have access to non-public information concerning a company. It also includes anyone owning more than 10% of the voting shares in a corporation.

Insider disclosure

The legally required public disclosure by insiders of their securities holdings and transactions.

Insider Report

A report of all transactions in the shares of a company made by those considered to be insiders of the company. It is submitted each month to the provincial securities commissions and allows the administrators to monitor trading by such people to ensure regulations are not violated.

Installment debentures

A bond or debenture issue in which a predetermined amount of the principal becomes due and payable each year. Also called a serial bond or debenture. This is popular as a municipal financing vehicle.

Installment receipts

A new issue of stock sold with the obligation that buyers will pay the issue price in a series of installment payments instead of one lump sum payment. This is also known as partially paid shares. The buyer usually pays a deposit upon settlement, perhaps one-half the issue price of the shares, with the balance to be paid in one year.

Institutional clients

The sales department of a securities firm serves two categories of clients. The institutional segment deals with banks, insurance companies, trust companies, pension fund managers and large corporations. The retail branch deals with individual investors.

Intangible asset

An asset which has no physical substance, such as goodwill, patents, trademarks and copyrights.

Integrated Market Enforcement Team (IMET)

A partnership initiative between the federal Ministry of Justice, the Royal Canadian Mounted Police, the Vancouver Police and the BCSC to improve policing in the securities markets.

Interest rate anticipation

This is the process of analysing and forecasting the trend of interest rates and then establishing an average term to maturity for the bond portfolio which will maximize the return – should the forecast prove correct. Anticipation of rising interest rates would dictate shortening the average term to maturity whereas an environment of declining interest rates would likely provide the greatest opportunity at the long end of the market. Pure interest rate anticipators would likely invest only in the highest grade bonds available because their analysis does not include credit risk. Typically interest rate anticipators are not active traders.

Interim certificates

When a new issue of a security is marketed, temporary certificates, called interim certificates, are sometimes delivered. These are later exchanged for permanent or definitive certificates.

Interim statements

These are financial statements issued for a certain period within a fiscal year, such as a three-month or first quarter interim statement.

Internal rate of return

The rate of return that would make the present value of future cash flows plus the final market value of an investment or business opportunity equal the current market value of the investment or opportunity. Also called dollar-weighted rate of return.

International mutual fund

A mutual fund that invests in securities markets anywhere in the world. International mutual funds usually tend to concentrate only on non-American securities. Not to be confused with the term “global” mutual funds that buy both foreign and domestic (U.S.) stocks and bonds.

Intrinsic value

That portion of a warrant, right or call option’s price that represents the amount by which the market price of the underlying security exceeds the price at which the warrant, right or call option may be exercised. The intrinsic value of a put is calculated as the amount by which the underlying security’s market value is below the price at which the put option can be exercised.


For most companies this is merchandise, raw materials, unfinished products and finished products of a business that have not yet been sold. Investment dealers hold inventories of shares, bonds, debentures and other investment products to fill long and short positions for clients.

Inventory turnover ratio

This is the cost of goods sold by a company, divided by its inventory. The ratio may also be expressed in terms of the number of days required to sell current inventory by dividing the ratio into 365. This ratio indicates the efficiency of management in turning over the company’s inventory and can be used to compare with other companies in the same field.

Inverted yield curve

This is an unusual situation in the economy where short-term interest rates are higher than long-term rates. An inverted yield curve occurs when an increased demand for short-term credit drives up rates on treasury bills and money-market funds, while long-term rates move up more slowly because borrowers are not willing to pay for the higher, longer-term rates. An inverted yield curve can indicate an unhealthy economy, marked by high inflation and low levels of confidence. Also called a “negative yield curve.”


The purchase or ownership of a security to make money by gaining income, increasing capital, or both. Investments may also include artwork, antiques and real estate.

Investment advisor

This is a person employed by an investment dealer who provides investment advice to clients and executes trades on their behalf in securities and other investment products. Investment advisors must attain set educational qualifications, follow certain rules and regulations and be registered by the securities commission in the province in which he or she works.

Investment counsellor

A specialist in the investment industry paid by fee to provide advice and research to investors with larger sized accounts.

Investment dealer

This refers to securities firms that employ investment advisors to work with retail and institutional clients and have underwriting, trading and research departments.

Investment Dealers Association of Canada (IDA)

The Canadian investment industry’s national trade association and self-regulatory organization. The IDA represents and polices the activities of approximately 114 member firms.

Investment fund

Another term used to describe a mutual fund. A company which uses capital to invest in other companies.

Investment Industry Regulatory Organization of Canada (IIROC)

The national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. Formerly the IDA and RS.

Investment objective

The financial goals of an investor. Risk tolerance, time horizon, financial circumstances, and the investment personality of a client, all play an integral role in the investment objectives.

Investment Policy Statement (IPS)

An Investment Policy Statement (IPS) is a written document that crystalizes the key components and guidelines governing the management of your personal investment portfolio.

The purpose of your IPS is to set forth in writing:

  • An appropriate set of objectives and goals to be attained through the investment of your savings.
  • The boundaries for your investment portfolio’s asset allocation, diversification, individual investment selection, expected rates of return, etc.
  • A guide for you to follow and to ensure each investment decision is consistent and supportive of your stated financial goals.

This statement provides the general investment goals and objectives.


A person whose principal concern in the purchase of a security is the minimizing of risk, compared to the speculator who is prepared to accept calculated risk in the hope of making better-than-average profits, or the “gambler” who is prepared to take even greater risks. More generally it refers to people who invest money in investment products.


Any of a company’s securities, or the act of distributing them. Issued shares refer to that part of the authorized shares which have been issued for sale by the corporation. The total number of authorized shares does not have to be issued.

Issuer bid

An offer by an issuer to buy back some of its own securities. This is usually done because the company feels the market is undervaluing its securities.