Dictionary

Letter I

• Information effectiveness

  Information effectiveness depends on the degree to which the market price reflects all the available relevant information. If a financial instrument is undervalued in view of the given public information momentarily available, investors try to buy the security, expecting that the price will increase to the equilibrium price. The driving force of information effectiveness is the competition that exists among investors, who try to maximise their profits.

• Insurance

  The purpose of insurance is to protect the client from a financial loss resulting from a certain event. One manner of classifying insurance is the type of insurance event, e.g. personal accident, fire, or theft. The type of insurance has an impact on the insurance c ompany’s risk and cashflow. On the contrary, long-term insurance encompases contributions spanning many years. Insurance is generally based on the aggregation of independent insurance events.

• Interim certificates

  If the subscriber has failed to repay the whole rate of issue of the subscribed stock before the company is entered in the Companies Register (the so-called outstanding share), after it is entered into the Register the company issues an interim certificate to the subscriber, which will replace all the shares of one type subscribed by him and not paid.

• Investment coupon

  An investment coupon is a registered security, which entitles its holder to buy shares intended for sale in exchange for the investment coupons.

• ISIN

  Issues of publicly tradable securities are designated with the ISIN code (International Securities Identification Number). This international system is regulated by the ISO-6166 standard. ISIN is a twelve-digit alphanumeric code, where the first two characters represent the abbreviation of the issuer’s country of origin (CZ – Czech Republic). This abbreviation is contained in ISO 3166. The next nine digits represent the basic number, with the last number representing the control number. In the Czech Republic use is made of only the last six digits of the basic number, i.e. the first three numbers of the basic number are zeros. Issues are classified by the basic number into circuits according to the business activities performed by the company.