# IC

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## Import Certificate

A proposed system to lower the U.S. trade deficit. Under the system, exporters would be issued import certificates allowing them to import up to the total value they export. Exporters may then sell these certificates to importers, who need them to conduct their business. The concept would maximize the value of imports, allowing it to be no greater than the value of exports. While this is not technically a tariff, it has much the same effect. Import certificates were proposed by Warren Buffett in 2003.

## Information Coefficient

A measure of the correlation between expected and actual returns. The IC is used internally within a firm to judge the performance of individual financial forecasters. The IC is measured on a scale between 0 to 1, with 1 indicating no difference between expected and actual returns. An analyst with a consistently high IC on his/her predictions will likely receive promotions and bonuses, while one with low information coefficients will likely lose his/her job.

## Interest Cost (IC)

A comprehensive and time-adjusted measure of loan cost to the borrower.

IC on a Mortgage: IC is what economists call an “internal rate or return.” It takes account of all payments made by the borrower over the life of the loan relative to the cash received up front. On a mortgage, the cash received up front is the loan amount less all upfront fees paid by the borrower. On an ARM, IC captures the effect of interest rate changes on the monthly payment and the balance, but future rate changes must be assumed.

Formula: IC is (i) in the formula below:

L - F = P1 + P2/(1 + i)2 +… (Pn + Bn)/(1 + i)n
Where:

L = Loan amount

F = Points and all other upfront fees paid by the borrower P = Monthly payment

n = Month when the balance is prepaid in full

Bn = Balance in month n

IC Versus APR: IC differs from APR in the following ways: IC is measured over any time horizon, whereas APR assumes that all loans run to term. IC may be measured after taxes whereas APR is always measured before taxes. On an ARM, IC can be calculated on any interest rate scenario whereas APR always uses a no-change scenario.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
References in periodicals archive ?
(82.) NARA, RG 13, Docket 4092, Association of Colored Railway Trainmen versus Illinois Central Railroad Company and Yazoo & Mississippi Valley Railroad Company.
(1915), History of the Illinois Central Railroad to 1870 (Urbana: University of Illinois Press).
Upon retiring from the corporate business community in March 1989, he was Vice President-Corporate Affairs, Illinois Central Railroad. He is currently a business communications consultant.
Then after the Illinois Central Railroad came through and the new village of Pana was built around the railway.
Jones, a landowner who donated property for the building of the train depot when the Illinois Central Railroad began moving into the area in 1882.
John Howell, was promoted to a conductor by the Illinois Central Railroad company and is the youngest one on record for a long time in the Centralia district.
The benevolent Jones, who would soon serve as the new town's first postmaster, proved his mettle when in 1882 the Illinois Central Railroad began laying rails through the area.
Victory Bell can still remember the night when he boarded the Illinois Central Railroad's City of New Orleans in Durant, Mississippi, bound for Chicago, then changed trains and ended up in Rockford.
A \$3.25 million bridge project that will carry Poplar Street traffic over the Illinois Central railroad is advancing without opposition.
Stone announced that next week, will in all probability, witness the completion of the new five-stall roundhouse, which is being constructed by the Illinois Central Railroad between Du Quoin and St.

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