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IBAN

IBAN (International Bank Account Number) is an international bank account number format. In the Czech Republic, the IBAN has 24 alphanumeric characters. It contains the country code, check digits, the bank's identity code and the account number.

Income fund

A fund that pays income to its unit holders at regular intervals.

Index

An indicator showing the trend on an equity market. The market prices of selected stocks are used to create an aggregate indicator reflecting the current situation and trend.

Industrial output

Industrial output is measured by the industrial output index (IOI), which is calculated in compliance with international standards. The calculation of the IOI is based on monthly industrial product output statistics and a two-stage system of weights. It generalises the trends of industrial output by gradual aggregation of the indices of output of selected products (representatives). The individual indices of output of the selected representatives, based on the volume of their output in the base and current periods, are aggregated into partial indices of product groups by their shares (weights). The weights result from the share of the output of the representative in the output of a given group of products measured by the gross turnover method. This results in a partial industrial output index for the given group of representatives. The partial indices of output of the given groups of representatives are then weighted, in the second step of the gradual aggregation, by the weights determined by their share in the value added created in industry in total. This is actually a sample index representing the weighted arithmetic average of the output indices of the selected representatives aggregated by means of the two-stage system of weights.

Industrial producer price index

The industrial producer price index is calculated on a monthly basis, using data on selected representatives (about 5,700) provided by selected organisations (about 1,300). The reported prices are those agreed upon between the supplier and the customer in this country. They do not include VAT, excise tax, costs of transport to the customer and costs incidental to transport, and are invoiced for major transactions.

Inflation

Commonly, inflation is considered to be growth of the average price level, i.e. it characterises the extent of money depreciation in an exactly defined time period. The inflation rate is measured by the increment of the consumer price index.

Inflation forecast

The inflation forecast is the key source material for the Bank Board’s decisions. This forecast is drawn up by the Monetary and Statistics Department in interaction with the board members. It represents the CNB experts’ views of the most likely future evolution of the economy, including the behaviour of the central bank itself. The forecast is based on a consistent medium-term framework taking the form of a model approach which is supplemented with an expert opinion primarily affecting the short-term forecast horizon. The most relevant for monetary policy decision-making is the inflation forecast at the so-called monetary policy horizon (about 12–18 months ahead), which affects the current interest rate settings. For more details see:  www.cnb.cz/en/monetary_policy/forecast/ 

Inflation rate

The increase in the average (basic) consumer price index for the last 12 months relative to the average for the previous 12 months.

Inflation risk

Inflation risk affects the real rate of return on investment instruments. A high inflation rate may reduce the value of an investment, causing the investor to achieve a negative rate of return.

Inflation target

The level of consumer price inflation that the CNB endeavours to achieve, set publicly and well in advance.

Insider trading

An illegal type of trading based on abuse of non-public information. Non-public information is price-affecting information unknown to the public relating to one or more issuers of securities. Abuse of non-public information by primary persons (i.e. those who obtain such information in the workplace) or secondary persons (i.e. those who obtain such information from a primary person) is considered a crime in advanced countries.

Institutional sector (or simply sector)

An institutional sector groups together institutional units which have a similar type of economic behaviour and objectives. The aggregation into consistent groups allows one to assess the financial position of the economy as a whole. Each institutional unit belongs to only one sector.

Institutional unit

An elementary economic decision-making centre characterised by uniformity of behaviour and decision-making autonomy in the exercise of its principal function.

Interest rate fixation

A period of interest rate fixation, i.e. a period at the beginning of a contract for which the agreed interest rate cannot be changed. The period up to 1 year includes floating rates.

International investment position

Records stocks of financial assets and liabilities between residents and non-residents as of a particular date.

Investing

Investing means placing free funds in assets which are expected to go up in value.

Investment

Relinquishment of the present value of funds, which is certain, in order to obtain a future value of funds, which is not certain, on the rational assumption that the future real value of the funds will be higher than the real present value. The change in the real value of the funds is the investor's reward for undertaking the investment.

Investment company

A founder and administrator (manager) of funds. Subject to special regulation laid down in Act No. 189/2004 Coll., on Collective Investment, and to supervision by the Czech National Bank. Its activities are also inspected by the depository and the auditor.

Investment firm

A brokerage firm; a company which trades in securities, arranges the issuance of securities on behalf of the issuer and provides related services, brokers the purchase or sale of securities, ensures safekeeping operations, administers the repayment of securities and the payment of yields thereon on behalf of the issuer, and provides consulting services in the field of securities and derivatives trading.

Investment firms' guarantee fund

Established to protect investors in a situation where an investment firm is not able to meet its obligations to clients and to deliver assets accepted from clients for the purpose of providing an investment service (client assets), and there is no prospect of it being able to do so (usually due to bankruptcy).

Investment fund

A fund based on the same principles as a joint stock company. In the Czech Republic, a fund which pools funds by issuing shares and uses the funds received to purchase securities, real estate and movable property, or deposits them on a special bank account.

Investment horizon

The time at which a foreseen yield can be expected.

Investment instrument

An asset which serves to increase wealth. The benefits thereof are embodied in a claim on future cash flow. Basic types of investment instruments include financial investment instruments (e.g. securities, financial derivatives) and real investment instruments (e.g. real estate, precious metals, art collections).

Investment intermediary

An investment intermediary is a natural person or legal entity registered with the CNB which provides the investment services of receiving and transmitting orders relating to investment securities or collective investment securities. An investment intermediary does not accept funds or clients' investment instruments and transmits orders solely to an investment firm, investment company or investment fund.

Investment risk

The probability of a decrease in the value of an investment. Equity funds have the highest investment risk and money market funds the lowest.

Investment strategy

The defining of an investment approach in terms of expected objectives. The determination of how long investors wish to invest for, how often they will invest (on a regular or one-off basis), how much money they wish to invest, what returns they expect and particularly what risk they are willing to undertake. Three types of investors can be identified, differing mainly in terms of their attitude to risk: conservative, standard and speculative.

Investor

All natural persons or legal entities which invest their free funds, directly or through an investment intermediary, in the investment instruments of a given country.

IOSCO

The International Organisation of Securities Commissions is an association of capital market regulators, the main objectives of which include a) cooperation in unifying the forms and objectives of capital market regulation, b) exchange of information, c) cooperation in the supervision of international securities transactions.

ISIN

International Securities Identification Number - a basic 12-digit number used to identify securities. The 12-digit code of a securities issue, consisting of letters and numbers. It helps identify the range of activities of the issuer and the class of the security (e.g. CZ0005003232).

Issue

A set of fungible securities issued by an issuer at the issuer's decision. The issuer determines the category of the security (share, bond, unit), the face value, the number, the type and the form of such securities.