Guide to Analysing Companies

partners (rather like a mutually owned institution), who receive
a share of the profits from the businesses into which their
money is channelled. Likewise, businesses that receive money
from Islamic banks pay no interest; instead the bank shares in
the company’s profit as if they were partners. Banking accord-
ing to Islamic principles has become more widespread over the
past few decades, particularly since oil wealth has spread
through the Arab world, but it dates back to the early part of the
seventh century. (See 
ZAKAT
.)
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ISA
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ISMA
See international securities market association.
Issue
The sale of a new security. An issue can be made in several
ways:
 through an offer for sale in which the issuing house
(usually an investment bank or broker) buys the
securities from the company, takes the risk on to its own
and others’ books, and sells the securities to the public;
 through a direct sale by the company itself;
 through a private placement of only part of the
equity to a restricted number of investors. 
A company’s issued share capital is the face value of the
shares that it has issued. Issued capital should be distinguished
from market capitalisation, which is the value put upon
all those issued shares by a stockmarket (that is, the share
price multiplied by the number of shares in issue). For example,
a company which has issued 10m 10-cent shares has an issued
share capital of $1m. If the stockmarket price of its shares is $2,
its market capitalisation is $20m.
I
ISSUE
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Jj
Jobber
The old name for a market maker on the london stock
exchange. The long-standing existence of dual capacity
meant that, before big bang in 1996, a jobber could not be a
broker, and vice versa. Jobbers could deal directly only with
brokers or with other jobbers, not with the general investing
public, private or institutional. With Big Bang the distinction
between jobber and broker was removed and with it outdated
practices that had featherbedded the financial community at the
expense of investors. The end of dual capacity brought
London’s equity markets into line with their (more competi-
tive) counterparts in the United States. Much of the rest of
Europe soon followed. 
Junk bond
A bond issued by a US company or institution whose credit
rating is below investment grade, a ranking provided by
the two largest rating agencies: Moody’s Investors Service and
Standard & Poor’s. Because their issuer is rated below invest-
ment grade, junk (or high yield) bonds offer a higher rate
of interest to compensate the holder for the extra risk of a
default.
Junk bonds were the idea of Michael Milken of Drexel
Burnham Lambert and came into fashion in the 1980s. He
helped financiers such as Ivan Boesky to raise the money
needed for a spate of ambitious takeovers. Milken was even-
tually indicted for wrongdoing and Drexel collapsed, but not
before the two of them had helped to transform the capital
markets in the United States. Bonds that lose their status as in-
vestment grade are called fallen angels; those that travel in
the opposite direction are rising stars.
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Kk