Interest Rate Risk
The possibility of a reduction in the value of a security, especially a bond, resulting from a rise in interest rates. This risk can be reduced by diversifying the durations of the fixed-income investments that are held at a given time.With the rise and fall of interest rates, announced by the Reserve Bank of India from time to time, the fortunes of the bond and stock markets are closely related . Fixed rate debt instruments fall in value as the interest rate rises, and vice versa. Highly leveraged companies suffer if the interest rate rises, and vice versa. Highly leveraged companies suffer if the interest rate rises, as they have to pay more for their borrowing. This reduces the overall profitability.
International Finance Corporation
(IFC)is a World Bank subsidiary established in 1956 to promote private sector investment in developing countries through loans and equity financing without government guarantees. IFC charges market interest rates, seeks profitable returns, and serves as a link with world capital markets. IFC can borrow from IBRD and make loans to private enterprise.
International Monetary Fund (IMF)
UN specialized agency established in 1944 under Bretton Woods system to help prevent unstable exchange rates and competitive devaluations of pre-Second World War Western economies.Organization set up in 1945 as an outcome of the Bretton Woods Agreement (1944), it seeks to promote international monetary co – operation, expand international trade, stabilize exchange rates, and help countries with short – term balance of payment difficulties to maintain their exchange rates. Its member countries may buy foreign exchange from the fund to tide over temporary shortages. However, for any substantial borrowing the Fund may require the borrower to accept its advice, the fund’s objectives re to ensure that the debtor countries can achieve sustainable growth, balance of payments viability, and normal relations with creditors, including access to international financial markets.
Inventory
Itemized catalog or list of tangible goods or property, or the intangible attributes or qualities.A value entered on the balance sheet of a company of the firm’s raw materials, work in progress, materials used in operations or manufacture, and finished gods. The valuation may be made on the LAST – IN – FIRST – OUT method or FIRST – IN – FIRST – OUT method.
Inventory Turnover
Annual sales divided by the average cost of inventory given the ratio of inventory turnover. The higher the ratio, the more prosperous the company. A low turnover ratio would indicate unsold stock and a weak sales strategy.
Inverted Yield Curve
An uncommon situation in which long-term interest rates have lower yields than short-term interest rates. This is often a sign that interest rates are expected to decline. also called negative yield curve.A normal yield curve is ascending, e.g., long – term bonds show a greater yield than short – term bonds.
An inverted yield curve on the other hand, is descending, showing higher yield on short – term bonds than long – term bonds.