Guide to Analysing Companies

parts of the market where it was needed.
Interdealer broker
A broker that acts as an intermediary between dealers in the
equity, bond or derivatives markets. By broking large
blocks of securities, interdealer brokers help dealers to
balance their books and provide liquidity to a market when
and where it is needed. Interdealer brokers do not trade on their
own account but are often involved in big transactions, particu-
larly in the bond markets.
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Interest 
There are two meanings.
1 The price of money over time (see rate of interest, an-
nualised percentage rate, coupon, discount rate,
internal rate of return, negative interest, variable
rate and yield). If the rate of interest is 8% a year, then for
someone to borrow $100 for a whole year will cost them $8,
when calculated as simple interest. Compound interest involves
paying interest on the principal and on accrued interest as
well. Hence if interest is due every six months, but is paid only
annually, the interest due would be 8% on $100 for six months
(which is $4) plus 8% on $104 for the next six months (which is
$4.16).
2 Somebody’s share in property, as in “she had a 50% interest in
the house”.
It is not my interest to pay the principal, 
nor my principle to pay the interest.
Richard Brinsley Sheridan
Interest coverage ratio
The number of times a company’s annual interest payments
can be divided into the net operating income. An indication of
how sure the company’s creditors can be of repayment.
Interest-only loan
A loan on which only the interest is paid at regular intervals
until the loan matures, at which time the full amount of the
principal is repaid. This differs from the case where interest
and principal are repaid throughout the life of the loan in a
series of regular payments. Interest-only loans are most popular
during times of high inflation. This erodes the value of the
loan so that there is relatively less to pay off when it matures.