Introduction to Finance

t
Facebook IPO, 303–306
going public, cost, 308–311
high-tech IPOs, share price performance, 
305
f
hot IPO markets, 310
investment bank advice, 300
lock up provisions, 304–305
offerings, number, 311
t
studies, 308–311
Initial returns, 309
t
Inside information, 327–328
Insider trading law, clarity (absence), 328
Instantaneous settlement, 266
Insurance agent, career, 17
Intangible assets, 593
IntercontinentalExchange (ICE), NYSE bid, 
314
Interdistrict settlement, 96
Interest
annual real rate, 198
coverage, calculation, 433–434
quarterly compounding, 243–244
real rate, defined, 197
risk-free rate, defined, 197
Interest-bearing federal obligations, average 
length/maturity distribution, 202
t
Interest rate 
(r).
See also
Short-term interest 
rates
annuities, 237–239
bond prices, relationship, 282
f
calculation/computation, 197, 501
cashing in, 568–569
changes, 196
defined, 191
determination, 230–232
example, 192
f
effect, 195
equilibrium level, change, 192
financial calculator solution, 230
future value/time period, relationship, 224
f
international factors, 196
levels, historical changes, 193
maturity structure, 203–206
present value/time period, relationship, 229
f
solving, 230–231, 237–238
spreadsheet solution, 230
table-based solution, 230–231
term structure, 203–206
ranking, 204
t
Interest rate risk
defined, 69, 197, 282, 350
impact, 282–283
Intermediate-term federal obligations, 
commercial bank holding, 199
Internal financing, external financing 
(proportion), 254
Internal funds, long-term financing, 254
Internal growth rate, defined, 579
Internally generated financing, 444
Internal rate of return (IRR), 527, 530–535
misconception, 534
net present value (NPV), relationship, 
534–535
required by investors, 572
Internal rate of return (IRR) method defined, 
531
Implementation stage, defined, 524
Implicit agency costs, 407
Importer
bank, financing, 147–148
example, 148–149
financing, 147–149
goods payment arrangement, 147
Income
increase, 178
levels, 178
employment levels, association, 178
tax rates, increase, 111
Income statement, 391–393
business risk, effects, 585
t
defined, 391
example, depreciation expense (impact), 545
financial risk, effects, 585
t
leverage, effects, 587
t
project income statement, 543
t
ratio analysis, 424–425
risk sources, 349
t
Incremental after-tax cash flows, 541
estimation, 541
Incremental after-tax operating cash flows, 
557, 559
example, 560
t
Incremental cash flows, defined, 541
Independent brokers, defined, 315
Independent projects, defined, 522
Indifference level, 582–583
Indirect quotation
calculation, 136
method, defined, 136
Indirect transfers, usage, 24
Individual net worth, defined, 27
Individual retirement accounts (IRAs), 265
savings placement, 195
Individuals, savings level, 179–180
Individual saver, life stages, 179–180
Industrial senior debt ratings (US), 
distribution, 589
t
Industry comparative analysis, defined, 424
Industry-specific risk, 363
Inefficient markets, price reactions, 355
f
Inflation
causes, 210–211
control, 142
defined, 27, 105, 207
double-digit inflation, impact, 193
implications, 225
increase, anticipation (absence), 192
rate (
See
Compound inflation rate)
types, 210–211
Inflationary bias, 211
Inflation premium (IP), 207–211
defined, 197
expectation, 207
Informationally efficient market (efficient 
market), defined, 355
Initial margin, defined, 319, 335
Initial outlays, example, 557