Income fund. A mutual fund that seeks current income rather than growth of capital. Income funds typically invest in bonds and/or high-yielding stocks.

Income risk. The possibility that a portfolio's dividends will decline as a result of falling interest rates. Income risk is generally greatest for money market instruments and short-term bonds, and least for long-term bonds.

Index. See benchmark.

Index fund. A passively managed mutual fund that seeks to parallel the performance of a particular market index.

Indexing. A low-cost investment strategy that seeks to match, rather than outperform, the return and risk characteristics of an index, by holding all securities that make up the index or a statistically representative sample of the index. Also known as passive management.

Information ratio. In investing terminology, the ratio of expected return to risk. Usually, this statistical technique is used to measure a manager's performance against a benchmark. This measure explicitly relates the degree by which an Investment has beaten the Benchmark to the consistency by which the Investment has beaten the Benchmark.

Inflation. A general rise in the prices of goods and services.

Inflation risk. The possibility that increases in the cost of living will reduce or eliminate the returns on a particular investment.

Interest rate. The amount charged for borrowing money.