Page 88 - PRIAA Glossary

INTEGRATED HEDGE
A hedge involving managing more than one type of financial risk with a single derivative instrument. An example is a derivative instrument with different functional currency legs as a basis to split the fair value of the derivative hedging instrument into multiple components. This makes the trade provide a fair value hedge as well as a cash flow hedge.
INTERACTION EFFECT
When two independent variables (a and b) affect an independent variable (c), the individual relationship between an independent variable (i.e., between a and b) on the dependent variable may also be affected by a separate relationship between two dependent variables.
INTERCONTINENTAL EXCHANGE (EUROPE)
(ICE CLEAR EUROPE)
ICE’s London-based clearing house which provides clearing services for a wide range of exchange-traded and futures contracts. ICE Clear Europe offers clearing services for over-the-counter (OTC) energy products and credit default swaps. ICE also offers OTC FX clearing.
INTEREST RATE CAP
An option (derivative) in which the buyer receives payments at the end of each period where the interest rate exceeds the agreed strike price.
INTEREST RATE COLLAR
An option product where the holder (buyer) is guaranteed
a maximum and minimum borrowing cost over a specified term. Simultaneous purchase of an interest rate cap and sale of an interest rate floor on the same index for the same maturity and notional principal amount.
INTEREST RATE DERIVATIVE
A derivative product that involves the exchange of cash flows calculated on a notional amount and determined by reference to specified interest rates.
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