GLOSSARY
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Welcome to our comprehensive glossary of stock market terms. Whether you’re a seasoned investor or just starting your journey in the world of finance, our glossary aims to provide you with clear and concise explanations of key terms and concepts. Simply click on any alphabet below to explore the terms starting with that letter.
Glossary
| Term | Description |
|---|---|
| L | An NYSE ticker symbol specifying that the stock is a nonvoting share. |
| Ladder strategy | An investment strategy that involves purchasing multiple financial products with different maturity dates. |
| Lady Macbeth Strategy | A corporate takeover scheme in which a third party poses as a white knight to gain trust; but then turns around and joins with the unfriendly party in a hostile takeover bid. |
| Laffer curve | A graphical representation of the relationship between tax rates and government revenue. |
| Lag | A situation in which an economic indicator or variable does not move in the same direction as the overall economy or market. |
| Lag response of prepayments | The delay between changes in interest rates and changes in prepayment speeds for mortgage-backed securities. |
| Lagging | An economic indicator that follows rather than leads changes in the overall economy or market. |
| Lagging indicators | Economic indicators that follow rather than lead changes in the overall economy or market. |
| Laisse-faire | A French term meaning "let do" or "leave alone" used to describe an economic system in which government intervention is minimal. |
| LAK | The currency code for the Lao kip; the official currency of Laos. |
| Lambda | A measure of an option's sensitivity to changes in the volatility of its underlying asset. |
| Land contract | A contract between a buyer and seller of real property in which the seller provides financing to the buyer to purchase the property for an agreed-upon price. |
| Landlord | The owner of a property who leases it to a tenant. |
| LAO | The ISO 3166-1 alpha-3 country code for Laos. |
| Lapsed option | An option contract that has expired without being exercised or sold. |
| Large scale asset purchase | A monetary policy tool used by central banks to purchase large quantities of financial assets to inject liquidity into the economy and stimulate growth. |
| Large-cap | A term used to describe companies with a market capitalization value of more than $10 billion. |
| Last in - first out (LIFO) | An inventory valuation method in which the last items added to inventory are assumed to be the first items sold. |
| Last sale | The most recent transaction price for a security or commodity on an exchange. |
| Last split | The most recent stock split for a publicly traded company. |
| Last trading day | The final day on which trading may occur for a particular futures or options contract before expiration. |
| Late charge | A fee charged by a lender when a borrower fails to make a payment on time. |
| Late tape | A situation in which trade data is reported after the close of trading due to delays or errors in reporting. |
| Late trading | The practice of placing orders for mutual fund shares after the close of trading but receiving the net asset value (NAV) calculated at the close of trading. |
| Latent default | A situation in which a borrower is likely to default on a loan but has not yet done so. |
| Later stage | A stage of development for a startup company in which it has established itself as a viable business and is seeking additional funding to expand its operations or enter new markets. |
| Launder | To engage in money laundering; which involves disguising illegally obtained funds as legitimate income through various financial transactions and transfers. |
| Law of large numbers | A statistical principle stating that as the number of independent trials increases |
| Law of one price | An economic principle stating that identical goods should sell for the same price in different markets when there are no transportation costs or barriers to trade. |
| Lay off | To terminate an employee's employment due to economic conditions or other factors beyond their control. |
| Layup | A basketball term used metaphorically to describe an easy investment opportunity with little risk and high potential reward. |
| LB | The ISO 3166-1 alpha-2 country code for Lebanon |
| LBO (Leveraged Buyout) | The acquisition of a company using a significant amount of borrowed money to meet the cost of acquisition. |
| LC (Letter of Credit) | A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. |
| LDC (Less Developed Country) | A country with a low level of economic development and a low Human Development Index (HDI) relative to other countries. |
| Leading | An economic indicator that leads changes in the overall economy or market. |
| Leading indicators | Economic indicators that lead changes in the overall economy or market. |
| Leakage | A situation in which money flows out of an economy rather than being retained and reinvested. |
| Lean enterprise | A business model that focuses on minimizing waste and maximizing efficiency in all aspects of operations. |
| Learned intermediary doctrine | A legal principle stating that manufacturers of products have a duty to warn consumers of potential risks; but that this duty can be fulfilled by providing warnings to an intermediary who is expected to pass the information on to the consumer. |
| Lease | A contract between a landlord and tenant in which the tenant agrees to pay rent for the use of a property for a specified period of time. |
| Leaseback | A financial arrangement in which a company sells an asset and then leases it back from the buyer. |
| Leasehold | An interest in real property that gives the holder the right to use and occupy the property for a specified period of time; subject to the terms of a lease agreement. |
| Leasehold improvement | An improvement made to leased property by or for the benefit of the tenant. |
| Least squares | A statistical method used to estimate the relationship between variables by minimizing the sum of squared errors between observed and predicted values. |
| Leave year | The 12-month period during which an employee is entitled to take their annual leave entitlement. |
| Ledger balance | The balance in an account at the end of a business day; including all deposits and withdrawals posted to the account during the day. |
| Legal capital | The minimum amount of capital required by law for a company to operate. |
| Legal entity | A person or organization recognized by law as having rights and obligations; such as the ability to enter into contracts and own property. |
| Legal list | A list of investments approved by state law for certain institutions such as banks and insurance companies. |
| Legal monopoly | A monopoly granted by law; such as a patent or exclusive license to provide a particular product or service. |
| Legal tender | Money that is recognized by law as valid for payment of debts and taxes. |
| Legally binding | Having legal force or effect; enforceable by law. |
| Legislation | Laws enacted by a legislative body such as Congress or Parliament. |
| Lender | A person or organization that provides funds to another person or organization in exchange for repayment with interest. |
| Lender liability | Liability incurred by a lender for engaging in unfair or deceptive practices or failing to disclose material information to borrowers. |
| Lender of last resort | A central bank or other institution that provides emergency loans to banks or other financial institutions facing liquidity problems. |
| Lending facility | A facility provided by a central bank or other institution that allows banks and other financial institutions to borrow funds on a short-term basis. |
| Lending rate | The interest rate charged by banks and other financial institutions on loans made to customers. |
| Leverage | The use of borrowed money or other financial instruments to increase potential returns on an investment. |
| Leverage ratio | A measure of a company's debt relative to its equity or assets; used to assess its financial risk. |
| Leveraged buyout (LBO) | The acquisition of a company using a significant amount of borrowed money to meet the cost of acquisition |
| Leveraged ETF | An exchange-traded fund (ETF) that uses financial leverage to amplify the returns of an underlying index. |
| Leveraged loan | A loan provided to a company or individual that already has a high level of debt or a low credit rating. |
| Liability | An obligation or debt owed by a company or individual to another party. |
| Liability insurance | Insurance that provides protection against claims resulting from injuries or damage to other people or property. |
| Liability matching | An investment strategy in which a company or individual matches the duration of their assets and liabilities to reduce financial risk. |
| Liar loan | A type of loan in which the borrower is not required to provide documentation to verify their income or assets. |
| Libel | A written or published false statement that harms a person's reputation. |
| Liberalization | The process of reducing government regulations and restrictions on economic activity. |
| LIBID (London Interbank Bid Rate) | The interest rate at which banks in London are willing to borrow funds from other banks. |
| LIBOR (London Interbank Offered Rate) | The interest rate at which banks in London lend funds to other banks. |
| License | A legal agreement granting permission to use a particular product; technology; or intellectual property. |
| Licensing agreement | A legal agreement between two parties in which one party grants the other party the right to use its intellectual property in exchange for payment or other consideration. |
| Lien | A legal claim against an asset that is used as collateral for a loan or other obligation. |
| Life annuity | An annuity contract that provides regular payments for the lifetime of the annuitant. |
| Life cycle cost | The total cost of owning and operating an asset over its entire lifetime; including acquisition; maintenance; and disposal costs. |
| Life estate | A legal interest in real property that lasts for the lifetime of the holder and terminates upon their death. |
| Life expectancy | The average number of years a person is expected to live based on current mortality rates and demographic trends. |
| Life insurance | Insurance that provides a payment to a designated beneficiary upon the death of the insured person. |
| Lifetime learning credit | A tax credit available to taxpayers who pay qualified tuition and related expenses for themselves; their spouse; or their dependents. |
| LIFO (Last In; First Out) | An inventory valuation method in which the last items added to inventory are assumed to be the first items sold |
| Lifted | An increase in the price of a security or commodity. |
| Light crude oil | A type of crude oil with a low density and low sulfur content. |
| Light sweet crude oil | A type of crude oil with a low density and low sulfur content that is considered high quality and easy to refine. |
| Limit | The maximum or minimum price at which a security or commodity can be bought or sold. |
| Limit down | The maximum amount by which the price of a futures contract can decline in one trading day. |
| Limit order | An order to buy or sell a security at a specific price or better. |
| Limit up | The maximum amount by which the price of a futures contract can increase in one trading day. |
| Limited liability | A legal principle stating that the owners of a company are not personally responsible for its debts or liabilities beyond their investment in the company. |
| Limited liability company (LLC) | A type of business structure that combines the liability protection of a corporation with the tax benefits of a partnership. |
| Limited liability partnership (LLP) | A type of business structure that combines the liability protection of a corporation with the tax benefits of a partnership; but is only available to certain types of professional service firms. |
| Limited partner | A partner in a limited partnership who is not involved in the management of the business and is only liable for its debts up to the amount of their investment. |
| Limited partnership | A type of business structure in which there are one or more general partners who manage the business and are personally liable for its debts;and one or more limited partners who are not involved in management and are only liable up to the amount of their investment. |
| Line chart | A type of chart used in technical analysis that connects data points using straight lines to show trends over time. |
| Line item | A single entry in a financial statement or budget that represents a specific expense or revenue source. |
| Line of credit | A flexible loan arrangement between a borrower and lender that allows the borrower to draw funds up to a specified limit as needed. |
| Linear regression | A statistical method used to estimate the relationship between variables by fitting a straight line to observed data points. |
| Liquid | Having sufficient cash or other assets that can be easily converted into cash to meet financial obligations as they come due. |
| Liquid asset | An asset that can be easily converted into cash without losing value. |
| Liquid market | A market in which there are many buyers and sellers and assets can be bought and sold quickly without significantly affecting their price. |
| Liquidation | The process of selling assets to pay off debts or obligations;often as part of bankruptcy proceedings |
| Liquidation value | The estimated value of a company's assets if it were to be sold off and its debts paid. |
| Liquidity | The ability to buy or sell an asset quickly and easily without significantly affecting its price. |
| Liquidity preference theory | A theory that explains why interest rates are higher for longer-term loans than for shorter-term loans. |
| Liquidity ratio | A measure of a company's ability to meet its short-term financial obligations;calculated by dividing its liquid assets by its current liabilities. |
| Liquidity risk | The risk that an investor will not be able to buy or sell an asset quickly and easily without significantly affecting its price. |
| Listed | Traded on a stock exchange. |
| Listed option | An option contract that is traded on an exchange. |
| Listing agreement | A contract between a company and a stock exchange in which the company agrees to meet certain requirements in order to have its shares listed for trading on the exchange. |
| Listing fee | A fee charged by a stock exchange for listing a company's shares for trading. |
| Listing requirements | The requirements that a company must meet in order to have its shares listed for trading on a stock exchange. |
| Load | A sales charge or commission paid by an investor when buying or selling shares in a mutual fund. |
| Load fund | A mutual fund that charges a sales load or commission when shares are bought or sold. |
| Loan | A sum of money borrowed by one party from another;to be repaid with interest. |
| Loan agreement | A contract between a borrower and lender that sets out the terms and conditions of a loan. |
| Loan commitment | A commitment by a lender to provide a loan to a borrower up to a specified amount and under specified terms and conditions. |
| Loan loss provision | An amount set aside by a lender to cover potential losses on loans that may not be repaid in full. |
| Loan loss reserve | An account used by a lender to set aside funds to cover potential losses on loans that may not be repaid in full. |
| Loan origination fee | A fee charged by a lender for processing and approving a loan application. |
| Loan participation | A type of investment in which multiple investors pool their funds to make a loan to a borrower. |
| Loan shark | A person or organization that lends money at extremely high interest rates and often uses threats or violence to collect debts |
| Loan syndication | The process of involving multiple lenders in providing a loan to a single borrower. |
| Loan-to-deposit ratio | A measure of a bank's liquidity;calculated by dividing its total loans by its total deposits. |
| Loan-to-value ratio (LTV) | A measure of the amount of a loan relative to the value of the collateral securing the loan;calculated by dividing the loan amount by the appraised value of the collateral. |
| Local currency | The currency used in a particular country or region. |
| Lockbox | A service provided by banks to companies in which the bank receives and processes payments on behalf of the company. |
| Lock-in period | A period of time during which an investor is required to hold an investment and cannot sell it without incurring a penalty. |
| Lock-up agreement | An agreement between a company and its shareholders or employees that restricts their ability to sell their shares for a specified period of time. |
| Lock-up period | A period of time following an initial public offering (IPO) during which insiders and early investors are prohibited from selling their shares. |
| Lognormal distribution | A statistical distribution that is commonly used to model stock prices and other financial variables that cannot take on negative values. |
| London Interbank Bid Rate (LIBID) | The interest rate at which banks in London are willing to borrow funds from other banks. |
| London Interbank Offered Rate (LIBOR) | The interest rate at which banks in London lend funds to other banks. |
| Long | An investment position in which an investor has purchased an asset with the expectation that its price will rise. |
| Long bond | A bond with a maturity of 10 years or more. |
| Long hedge | A hedging strategy in which an investor takes a long position in a futures contract to protect against price increases in an underlying asset. |
| Long position | An investment position in which an investor has purchased an asset with the expectation that its price will rise. |
| Long straddle | An options strategy in which an investor buys both a call option and a put option on the same underlying asset with the same expiration date and strike price. |
| Long-term | Referring to a time horizon of several years or more for an investment or financial decision. |
| Long-term capital gain | A capital gain realized on the sale of an asset that has been held for more than one year. |
| Long-term debt | Debt that is due for repayment more than one year from the date it was incurred. |
| Long-term investment | An investment that is intended to be held for several years or more |
| Long-term liability | A liability that is due for repayment more than one year from the date it was incurred. |
| Lookback option | An exotic option that allows the holder to "look back" at the underlying asset's price history to determine the option's payoff. |
| Loss | The amount by which an investment's value decreases. |
| Loss aversion | A psychological phenomenon in which people feel more pain from losing money than pleasure from gaining an equal amount. |
| Loss carryback | A tax provision that allows a company to apply a net operating loss to previous years' income to reduce its tax liability. |
| Loss carryforward | A tax provision that allows a company to apply a net operating loss to future years' income to reduce its tax liability. |
| Loss leader | A product sold at a loss to attract customers and increase sales of other products. |
| Loss ratio | The ratio of losses incurred by an insurance company to premiums earned;used as a measure of the company's profitability. |
| Lot | A unit of trading for securities or commodities;typically representing a fixed number of shares or contracts. |
| Low | The lowest price at which a security or commodity traded during a specified period of time. |
| Lower bound | The lowest possible value for a variable or parameter in a mathematical model or optimization problem. |
| LSE (London Stock Exchange) | A stock exchange located in London;England;and one of the largest stock exchanges in the world by market capitalization. |
| LTV (Loan-to-Value Ratio) | A measure of the amount of a loan relative to the value of the collateral securing the loan;calculated by dividing the loan amount by the appraised value of the collateral. |
| Lump sum | A single payment made at one time;as opposed to a series of payments made over time. |
| Lump-sum distribution | A single payment made to a participant in a retirement plan upon their retirement or separation from service. |
| Luxury tax | A tax imposed on luxury goods or services that are considered non-essential and purchased by high-income individuals |
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