Intrinsic value The difference between the exercise or strike price of an option and the market value of the underlying security. For example, if the strike price on a call option is $43 to purchase a stock with a market price of $45, then the intrinsic value is $2. In the case of a put option, if the strike price is $45 and the market value of the underlying stock is $43, then the https://www.mediaondigital.com intrinsic value would also be $2. (See also in the money; contrast with extrinsic value.) Introduction A way of introducing a company to a stockmarket. No new shares are issued, but existing shares (which may have been in the hands of a small number of founders or their families) are distributed and sold more widely. Most such offerings are for small companies listing on junior stock exchanges.  Inventory A company’s merchandise; finished and unfinished products which have yet to be sold. Such goods are assets so they can be used as collateral or security for bank loans, which is also called inventory financing. Inverse yield curve In the normal structure of interest rates, the rate for long-term financial instruments is higher than that for shortterm ones. Plot this as a graph (rates on the vertical axis, maturity on the horizontal axis) and the curve slopes upwards from the bottom left hand corner to the top right. When there are strong expectations that a currently high inflation rate will soon fall rapidly, this curve can slope the other way; the longer the maturity, the lower are the rates. Plotting this on the graph is said to produce an inverse yield curve. Investment bank A bank whose main business is acting as an underwriter or agent for companies and other institutions (for example, municipalities or even countries) issuing debt or equity securities in order to raise money. Such banks rarely accept deposits or make loans. Instead they charge fees for advising their clients. They usually also make markets in the securities that they have underwritten and helped to issue as well as act as brokers or dealers in the securities markets. Controversially, investment banks’analysts have provided investors with research and made recommendations about the companies whose securities they have brought to the market. This has led to conflicts of interest. In order to win lucrative mandates from investment-banking clients, analysts were tempted, particularly during the boom years of the late 1990s, to write favourable recommendations about the companies they follow. The biggest investment banks (the so-called “bulge  bracket” banks) are American, with offices in most of the world’s financial centres.