Glossary of Business, Corporate Finance and Investment Terms

Growth Stocks

See Performance Stocks.

Godfather Offer

This is a takeover offer that is so generous that the board of the target corporation can't refuse it for fear of encouraging a stockholder lawsuit.

Hidden Reserves or Hidden Values

These are undervalued assets owned by a corporation that are not reflected in its stock price. Examples can be trademarks, patents, licenses, and land. Sometimes these undervalued assets become recognized for their true value resulting in the stock price increasing.

Hostile Takeover

The takeover of a corporation against the desire of its board of directors and senior management.


This is inflation that is out of control, where people lose confidence in the value of currency and put their assets in hard assets like gold, certain stocks, and real estate, including land. Historically, people start to lose confidence in their currency when the government is printing large amounts of money, deficits are out of control, or inflation exceeds five percent per year. See Inflation Hedge. See Barter.


Refers to the pledging of personal property to secure a loan. It does not transfer title. It transfers the right to sell the property in the event of a default on the loan payments. The sales proceeds are then applied toward repayment of the loan.

Indenture or Deed of Trust

An indenture is a written contract between the issuer of bonds and the bond holders setting forth all terms. It is sometimes called a Deed of Trust. The indenture will provide for the appointment of a trustee to act on behalf of the bondholders.


The increase in the price of goods, services, and other assets. Inflation causes a loss of purchasing power where currency loses value. It occurs when the supply of money increases faster than the economy is growing. See Hyperinflation and Inflation Hedge.

Inflation Hedge

An investment designed to protect the investor from the loss of purchasing power caused by inflation. Inflation hedges are usually investments in gold, certain stocks, and real estate, including land.

Initial Public Offering (IPO)

A corporation's first or initial offering of stock to be sold to the public. IPOs are an opportunity for the stockholders of a corporation to make a large profit if the market believes the corporation will earn profits and grow.

Internal Auditor (IA)

An employee who usually reports to the board of directors of a corporation. The IA guards against any wrong - doing on the part of management and reports whether management is following the board's directives, including company policies and procedures.

Inventory Turnover Ratio

This is the ratio of annual sales to average inventory. Sometimes called the Inventory Utilization Ratio, it indicates how many times the inventory of the company is sold and replaced during an accounting period. It is useful to compare the Inventory Turnover Ratio of a company to industry averages. A low turnover may be an unhealthy indicator.

Inventory Utilization Ratio

Refer to Inventory Turnover Ratio.

Jonestown Defense

Defensive tactics taken by management to discourage a hostile takeover that are so severe they are perceived to be suicidal for the corporation.

Keep well Agreement

A Keep well Agreement is a contract between a parent company and a subsidiary to maintain solvency and financial backing for the term of the agreement. It is a means of increasing the credit worthiness of Subsidiaries.
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