IFC Global Index
The IFC Global Index is a market capitalization weighted index that measures the market movements of 32 emerging markets. The Global Index is intended to represent the performance of the most active stocks in their respective stock markets and to be the broadest possible indicator of market movements. The markets include China, Korea, Philippines, Taiwan, India, Indonesia, Malaysia, Pakistan, Sri Lanka, Thailand, Argentina, Brazil, Chile, Columbia, Mexico, Peru, Venezuela, Czech republic, Egypt, Greece, Israel, Hungary, Jordan, Morocco, Nigeria, Poland, Russia, Saudi Arabia, Slovakia, South Africa, Turkey and Zimbabwe.

IFC Investable Index
The IFC Investable Index is a subset of the IFC Global Index; it includes only those securities, which are "Investable", i.e. those stocks which are freely available to foreign institutional investors. This index is also capitalization weighted. The regional weights are notably different from the Global Index.

Incentive Fee
See Performance Fee.

Index Arbitage
This strategy involves the purchase or sale of a basket of equities that replicates or closely tracks the listed index futures contract for those particular equities. The simultaneous purchase or sale of the futures contract offsets the directional risk of the position. Profits are generated by capturing any discount or premium in the price of the futures contract relative to its underlying basket of equities. The basket is dynamically adjusted for changes in the weightings of the constituent stocks. Within this strategy there can be additional opportunities. Add/deletes involve trading the stocks that are periodically deleted from the index against new stocks that are added to the index.

Information Ratio
The Active Premium divided by the Tracking Error. This relates the degree by which an investment has beaten the benchmark to the consistency by which the investment has beaten the benchmark.

In Sight
The amount of a particular commodity that arrives at terminal or central locations is or near producing areas. When a commodity is "in sight", it is inferred that reasonably prompt delivery can be made; the quantity and quality also become known factors rather than estimates.

Intercommodity Spread
A spread in which the long and short legs are in two different but generally related commodity markets. Also called an Intermarket spread. See Spread.

Interdelivery Spread
A spread involving two different months of the same commodity. Also called an Intracommodity spread. See Spread.

Interest Rate Swap
A transaction in which two counterparties exchange interest payment streams of differing character based on an underlying notional principal amount. The three main types are coupon swaps (fixed rate to floating rate in the same currency), basis swaps (one floating rate index to another floating rate index in the same currency) and cross-currency interest rate swaps (fixed rate in one currency to floating rate in another).

Intermarket Spread
The sale of a given delivery month of a futures contract on one exchange and the simultaneous purchase of the same delivery month and futures contract on another exchange.

Internal Rate of Return
IRR is the generally accepted methodology for measuring the performance of private equity investments. The IRR is the annualized implied discount rate calculated from a series of cash flows. It is the return that equates the present value of all invested capital in an investment to the present value of all returns.

IRR is preferred for private equity for several reasons. First, cash flow is controlled by the General Partner, negating the need to make time-weighted cash flow adjustments for the purpose of equitable comparisons. Secondly, the cash flow pattern inherent in the lifecycle of a private equity investment may create distortions on a time-weighted rate of return that are not indicative of the true investment performance. For example, the initial funding in partnerships may be used for expenses that result in a very large percentage loss on a very small invested base in the first few periods. Because only cash flows and the closing market value are used in IRR calculations, the return is not affected by interim pricing inaccuracies, as would be the case for a time-weighted rate of return.

International Business Company (IBC)
A term used to define a variety of offshore corporate structures. Common to all IBC's are the dedication to business use outside the incorporating jurisdiction, rapid formation, secrecy, broad powers, low cost, low to zero taxation and minimal filing and reporting requirements. An increasing number of offshore jurisdictions are permitting the use of nominee shareholders, directors and officers.

In-the-Money Option
An option having intrinsic value. A call option is in-the-money if its strike price is below the current price of the underlying futures contract. A put option is in-the-money if its strike price is above the current price of the underlying futures contract.

Intrinsic Value
A measure of the value of an option or a warrant if immediately exercised. The amount by which the current price for the underlying commodity or futures contract is above the strike price of a call option or below the strike price of a put option for the commodity or futures contract.

Introducing Broker (or IB)
Any person (other than a person registered as an "associated person" of a futures commission merchant) who is engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery on an exchange who does not accept any money, securities, or property to margin, guarantee, or secure any trades or contracts that result there from.

Inverted Market
A futures market in which the nearer months are selling at prices higher than the more distant months; a market displaying "inverse carrying charges," characteristic of markets with supply shortages. See Backwardation.