Definitions Starting with "L"

L-Shaped Recovery

An L-shaped recovery refers to substantial losses in economic growth followed by a period of stagnation. Represented graphically, GDP data looks like the letter "L. Read more

Labor Intensive

Labor intensive is used to describe any production process that requires higher labor input than capital input in terms of cost. The production of goods and services requires labor and capital in varying amounts, depending on the product. Read more

Labor Market Flexibility

Labor market flexibility is the degree to which a company is able to modify its labor force to maximize productivity. A company is constantly adjusting its labor force via variables like staff size, total productive hours, and wages. Read more

Labor Productivity

Labor productivity measures the hourly productive output for a country's economy during a period of time.  A country's labor productivity is a function of technological innovation, labor resources and capital investment. Read more

Labor Theory of Value

The labor theory of value says that the value of a finished good correlates solely with the number of labor hours required to produce it. Economist Adam Smith, the founder of the idea of modern capitalism, first conceived of the labor theory of value in the second half of the 18th century -- the time of the industrial revolution. Read more

Labor Union

A labor union is an organization that advocates for workers' rights and benefits through collective bargaining. Labor unions represent workers in both the public and private sector. Read more

Labor-Sponsored Venture Capital Corporations (LSVCC)

Labor-sponsored venture capital corporations (LSVCCs) are Canadian venture capital companies established by labor unions. Labor-sponsored venture capital corporations (LSVCCs) issue labor-sponsored investment funds (LSIFs). Read more

Ladder Option

A ladder option is an option contract that allows the holder to earn a profit as long as the underlying asset's market price reaches one or more strike prices before the option expires. A traditional option contract gives the holder the right to buy (call option) or sell (put option) an underlying asset at a preset price, known as the strike price, by the contract's expiration date. Read more


Laddering is a bond investment strategy whereby an investor staggers the maturity of  the bonds in his/her portfolio so that the bond proceeds can be reinvested at regular intervals. For example, say you have $75,000 to invest. Read more

Lady Godiva Accounting Principles (LGAP)

Lady Godiva accounting principles (LGAP) are informal, unofficial accounting principles under which companies make disclosures beyond what generally accepted accounting principles (GAAP) require. Lady Godiva is a famous historical figure from the 11th century. Read more

Lady Macbeth Strategy

A Lady Macbeth strategy is a merger strategy in which a company betrays a target company by first appearing as a friendly alternative to an unfriendly acquirer and then later joining forces with the unfriendly acquirer. Lady Macbeth is a character from Shakespeare's famous play Macbeth. Read more

Laffer Curve

The Laffer curve is a graphic representation of the relationship between an increasing tax rate and a government's total revenues. The relationship suggests that revenues decline beyond a peak tax rate. Read more


Laggard describes a stock that fails to perform as well as the overall market or a group of peers. In a broad sense, the term laggard connotes resistance to progress and a persistent pattern of falling behind. Read more

Lagged Reserves

Lagged reserves are currency reserves banks are required to hold with the Federal Reserve. Lagged reserves must be equal to the sum of all demand deposits from two weeks in arrears. Read more

Lagging Indicator

A lagging indicator is a financial gauge that becomes measurable only after an economic shift has taken place. There are certain economic indicators that rely on changes in productivity or economic growth. Read more

Laissez Faire

Laissez faire is a capitalist precept that states that market economies function at optimal efficiency in the absence of government regulation. The term laissez faire is French for "leave to do," or more accurately, "leave to be. Read more

Lame Duck

A lame duck is a person who has gone bankrupt or is in default. In politics, a lame duck is a politician whose tenure is about to end. Read more

Lanchester Strategy

The Lanchester strategy is a marketing strategy named after Frederick W. Lanchester, who wrote about World War II war strategies. Read more

Land Contract

A land contract is a contract in which the buyer of a property agrees to pay the seller in scheduled installments. A land contract allows the buyer of a property to use it while the seller continues to retain the deed. Read more

Land Flip

A land flip is an act of fraud whereby a group of people buy a piece of land and then profits by continually reselling to each other for more than its actual value. In a land flip, several buyers purchase land for a given price. Read more

Land Lease Option

A land lease option is a section of a lease contract that allows a renter to lengthen his or her use of a piece of land beyond the term specified in the contract. An individual who intends to rent a piece of property may ask the owner to include a land lease option as part of the lease contract. Read more

Land Rehabilitation

Land rehabilitation is the practice of returning a piece of land to the natural state it was in prior to human interference or damage from natural disasters. Land rehabilitation reclaims the natural state of a piece of land by removing buildings and other artificial structures, cleaning up and disposing of nonessential material and toxic chemicals and reintroducing vegetation once the soil has been nutrient fortified. Read more

Land Trust

A land trust is a trust comprised exclusively of real estate assets. A land trust holds one or more properties for the benefit of a designated group or organization (beneficiary). Read more

Land Value

Land value is the overall value of a piece of property. The value of a piece of property includes a number of variables including location, the distance of from commercial and health amenities (for example, shopping centers, hospitals and restaurants), the quality of the school district and enhancements to the property itself. Read more

Land Value Tax (LVT)

A land value tax (LVT) is a tax on undeveloped property. Local governments that impose an LVT specifically target pieces of property that someone owns but has not developed or modified for residential or commercial purposes. Read more


Landlocked is a term describing a piece of property that has no direct access. Landlocked property is separated from major access ways including streets, canals and public roads. Read more


A landlord is an individual who owns real estate that he or she leases to renters. Landlords may own either residential or commercial properties. Read more


A landominium is a housing community in which residents own the housing units as well as the land on which they are built. Typically developed as retirement communities, landominiums are usually multiple single-family homes surrounded by a plethora of amenities, including gardens, parks, golf courses and recreation facilities. Read more

Lapping Scheme

A lapping scheme is a fraudulent accounting practice that hides stolen cash by overlapping successive receivables. A lapping scheme begins when someone -- a clerk, for example -- steals money that was generated by a transaction (for example, a sale). Read more


Lapse refers to the expiration of an insurance policy or other agreement.   Let's say John Doe has a life insurance policy with a $5,000 annual premium. Read more

Large Cap

Generally speaking, large cap companies have at least $8 billion of market capitalization. Market capitalization refers to the value of a company's outstanding shares. Read more

Large Trader

A large trader is a person or entity that trades more than 2 million shares or $20 million worth of shares in a single day, or 20 million shares or $200 million worth of shares in a single month. Let's say Company XYZ is a pension fund that holds $1 billion of assets for a teachers union. Read more

Large Value Transfer System (LVTS)

The large value transfer system (LVTS) is a wire system in Canada that allows banks to transfer funds among each other. The Bank of Canada and the country's department of finance developed the LVTS, which is now owned by the Canadian Payments Association. Read more

Large-Value Stock

A large-value stock is a stock whose intrinsic value is greater than its market value. Let's say John Doe is analyzing Company XYZ. Read more

Last Fiscal Year (LFY)

Last fiscal year (LFY) refers to a company's most recent completed fiscal year. A fiscal year is a company's 12-month accounting cycle. Read more

Last Mile

In telecommunications, the last mile refers to the final step in the process that connects the end customer to a network. In the broader business world, last mile refers to the final, often expensive and time-consuming step necessary to bring a product to a customer. Read more

Last Trading Day

The last trading day is the last time traders may trade a derivative contract before it expires. Derivative contracts (for example, options and futures) have an expiration date, at which time the terms of the contract become null. Read more

Last Twelve Months (LTM)

Last twelve months (LTM), also known as trailing twelve months (TTM), is the 12-month interval occurring before a given point in time.   For example, an analyst who is issuing a report on October 15, 2012, will report last twelve months (LTW) earnings as those from October 1, 2011, to September 30, 2012. Read more

Last Will

A will is a legal document that indicates how a person wants his or her estate (money and property) to be distributed after death. Wills must expressly state whom the will belongs to, and it must be signed, dated, and include the signatures of at least two witnesses. Read more

Last Will and Testament

A last will and testament is a legally-binding document in which an individual expresses his last wishes concerning the affairs and distribution of his estate. An individual creates a will while still alive. Read more

Last-In, First-Out (LIFO)

Last-in, first-out (LIFO) describes a method for accounting for inventories. Under this system, the last unit added to an inventory is the first to be recorded as sold. Read more

Last-Sale Reporting

Last-sale reporting refers to the submission of trade details in the Nasdaq market. When a broker executes an order for a stock traded on the Nasdaq exchange, he or she must report it to Nasdaq no more than 90 seconds following its completion. Read more

Late Majority

Late majority refers to the last large group of people to adopt a new product or technology. Analysts estimate that the late majority, roughly 34% of a given population, adopts new technology only after the majority of the population has fully assimilated it as a part of daily life. Read more

Late-Day Trading

Late-day trading is the practice of illicitly recording trades executed after hours as having occurred prior to the end of market trading. A mutual fund's net asset value (NAV) reflects the value recorded at the close of a given trading day (4 p. Read more

Latin Baseball Futures

Latin baseball futures are investments in Dominican, Cuban or other Latin American baseball coaches or academies that train up-and-coming baseball players who could one day obtain multimillion-dollar contracts in the sport. Let's say a group of American baseball fans learns of a talented boy in the Dominican Republic. Read more

Law of 29

The law of 29 is a marketing theory that claims that individuals will purchase a new product or service after having been exposed to related advertising 29 times. The law of 29 is based on the idea that people are largely uninterested in buying new products. Read more

Law of Large Numbers

The law of large numbers states that as additional units are added to a sample, the average of the sample converges to the average of the population. Applied to finance, the law of large numbers implies that the more a company grows, the harder it is for the company to sustain that percentage of growth. Read more

Law of Supply

The law of supply is the microeconomic theory stating that all else being equal, as the price of a good or service increases, the number of goods or services offered will also increase. The law of supply states that as the price of an item goes up, and thus profit increases, suppliers will attempt to make more profits by increasing the amount produced. Read more


Layaway is an arrangement in which a retailer agrees to reserve a piece of merchandise for a customer who cannot immediately pay for it in full. Layaway is a delayed payment method. Read more

Layered Fees

Layered fees are management fees, typically in investment products, that investors pay to financial managers for the same group of assets. Many mutual funds, annuities and investment advisors charge layered fees. Read more


A layoff is a temporary or permanent termination of employment by an employer. Let's say John Doe works for Company XYZ. Read more

Lead Bank

In the securities industry a lead bank is a company, usually an investment bank, that helps companies introduce their new securities into the market by leading a syndicate of investment banks to issue the securities.   When a company decides it wants to issue stock, bonds, or other publicly traded securities, it hires an underwriter to manage what is a long and sometimes complicated process. Read more

Lead Time

Lead time is the amount of time between ordering something and receiving it. For example, let's say Company XYZ makes and sells widgets. Read more

Lead Underwriter

In the securities industry a lead underwriter is a company, usually an investment bank, that helps companies introduce their new securities into the market by leading a syndicate of investment banks to issue the securities. When a company decides it wants to issue stock, bonds, or other publicly traded securities, it hires an underwriter to manage what is a long and sometimes complicated process. Read more

Leadership Grid

A leadership grid, also known as a management grid, is a tool for determining leadership style. The idea dates to the 1960s and was developed by Robert Blake and Jane Mouton. Read more

Leading Indicator

Leading indicators are measurable indexes that signal potential upcoming changes in trends, business conditions, and the economy. Policymakers and other economic experts use these forecasts and predictions to make wiser financial decisions. Read more


Leakage occurs when money leaves an economy. In the investor relations world, leakage also refers to the unauthorized or unanticipated dissemination of information. Read more

Learning Curve

A learning curve is the time it takes to master a concept. It is more of an idea than a chart or other visual representation of learning. Read more


A lease is an agreement, usually in writing, between the owner of an asset and a lessee. There are many kinds of leases. Read more

Lease Payments

There are many kinds of leases and thus many ways to calculate and record lease payments. Some allow the lessee to buy the asset at the end of the lease term, some do not, for example. Read more

Lease to Own

Lease to own describes a situation in which a lessee leases an asset from the lessor and can become the owner of the asset after the lease term expires. For example, let's say John Doe's son, Jake, wants to learn to play the flute. Read more


A leasehold is an accounting category that contains leased assets. For example, let's say that Company XYZ leases a widget-making machine from Company ABC. Read more

Leasehold Improvement

A leasehold improvement is a change to a leased asset. For example, let's say Company XYZ is a restaurant company. Read more

Left-Hand Side

The left-hand side of a stock quote is the bid. A bid-ask is a quote that reflects the security’s bid price and its ask price. Read more


In the brokerage world, a leg is an individual component of a multistep trade. Let's say John Doe wants to do an options straddle, which involves buying call and put options with the same expiration date. Read more

Leg Out

Legging out means to unwind part of a transaction. Let's say John Doe conducts an options straddle, which involves buying a call and a put with identical expiration dates. Read more

Legacy Assets

Legacy assets are assets that have been on a company's balance sheet for a long time and are usually obsolete. For example, let's say that Company XYZ makes computers. Read more


A lemming is an investor who does whatever the crowd does. A lemming is a short, furry rodent that is noted for its tendency to migrate en masse, regardless of the danger of the location or the stupidity of the move. Read more


A lemon is an item whose defects were not outwardly apparent at the time that it was sold to a consumer.   ”Lemon” has typically referred to a defective new car but its current application has become more widespread. Read more


A lender is a creditor or any entity to which you owe money for services provided. If you borrow money from XYZ Bank, XYZ Bank becomes your lender. Read more

Lender of Last Resort

The term "Lender of Last Resort" refers to financial institutions or individuals that provide credit and/or liquidity to other financial institutions and/or individuals who have exhausted their remaining alternatives for credit or liquidity. There are generally two types of lenders of last resort: (1) financial institutions that provide credit to other financial institutions that require credit to remain solvent for their depositors; (2) institutions or individuals providing credit to individuals, commonly referred to as retail lending. Read more

Letter of Credit

A letter of credit is a bank's written promise that it will make a customer's (the holder) payment to a vendor (called the beneficiary) if the customer does not. Letters of credit are most common in international transactions, where buyers and sellers may not know each other well or laws and conventions may make certain transactions difficult. Read more

Letter of Guarantee

In general, a letter of guarantee is a written promise to take responsibility for another company's financial obligation if that company cannot meet its obligation. The entity assuming this responsibility is the guarantor. Read more

Letter of Intent

A letter of intent is a non-binding document detailing a planned action on the part of an organization or individual. A letter of intent is often drafted by companies in relation to a deal or transaction with another company, such as a merger. Read more

Level I Quote

A level I quote is the current best bid and offer for a security that trades on the Nasdaq or over-the-counter markets. Level I quotes do not disclose which market makers are bidding for or offering the security, whether there are limit orders on the security, or the size of potential trades at a particular price. Read more

Level II Quote

A level II quote is a set of real-time trading information, including the best bid/ask prices from market makers, for a security that trades on the Nasdaq or over the counter (OTC) markets. A level II quote for Company XYZ stock would include the real-time bid price, ask price, quote size, price of the last trade, size of the last trade, high price for the day, and low price for the day. Read more

Level III Quote

A level III quote is pricing information made available to registered Nasdaq market makers. A level III quote for Company XYZ stock would include the real-time bid price, ask price, quote size, price of the last trade, size of the last trade, high price for the day and low price for the day. Read more


A level-load is a periodic fee (usually annual) paid by the investor during the time he or she owns the investment.   Level-load mutual funds are often referred to as "C Shares. Read more


Leverage is any technique that amplifies investor profits or losses. It's most commonly used to describe the use of borrowed money to magnify profit potential (financial leverage), but it can also describe the use of fixed assets to achieve the same goal (operating leverage). Read more

Leverage Ratio

A leverage ratio is used to evaluate a company’s debt load in relation to its equity and assets. Investors use leverage ratios to understand how a company plans to meet its financial obligations and to determine how its debt is used to finance operations. Read more

Leveraged Buyout (LBO)

A leveraged buyout (LBO) is a method of acquiring a company with money that is nearly all borrowed. The basic idea behind an LBO is that the acquirer purchases the target with a loan collateralized by the target's own assets. Read more


A levy is the seizure of property in order to repay debt. In the U. Read more


In finance and investing, a liability is a claim on a company's assets. For example, let's assume that XYZ Company sold $1,000,000 of gift certificates during the holidays. Read more

Liability Insurance

Liability insurance, also called third-party insurance, protects the insured from claims arising from injuries and damages to other people or property. It covers legal costs and legally required payments resulting from the actions of the insured. Read more

Liability Matching

Liability matching is an investing strategy for investors who need to fund a series of future liabilities. Buy-and-hold and indexing strategies are about generating steady rates of return in a portfolio. Read more


A lien is a lender's claim against a collateral asset that may be legally sold should the borrower fail to repay a loan. When someone takes out a sizeable loan, such as a home mortgage or an auto loan, the lender often requires an asset that can be held as collateral against the loan. Read more

Lien Sale

A lien sale is the sale of a lien by a relevant authority to a third party in an effort to recoup money owed. Let’s assume John Doe owns a house in the country and the annual property taxes are $4,000. Read more

Life Settlement

A life settlement occurs when a person sells his or her whole or universal life insurance policy to a third party, who maintains the premium payments and receives the death benefit when the insured dies. Let's say John Doe has a life insurance policy that he no longer needs. Read more

Life-Only Option

The life-only option, which is generally associated with annuities, describes the contractual arrangement whereby annuity payments cease upon the owner's death. To understand how this works, let's assume you'd like to invest in an annuity that, after you retire, will provide guaranteed monthly payments of $1,000 to you every month for as long as you live. Read more

Life-Plus-Five Option

The life-plus-five option, which is generally associated with annuities, describes the contractual arrangement whereby annuity payments are paid out to a beneficiary for five years after the owner's death. To understand how this works, let's assume you'd like to invest in an annuity that, after you retire, will provide guaranteed monthly payments of $1,000 to you every month for as long as you live. Read more

Life-Plus-Ten Option

The life-plus-ten option, which is generally associated with annuities, describes the contractual arrangement whereby annuity payments are paid out to a beneficiary for ten years after the owner's death. To understand how this works, let's assume you'd like to invest in an annuity that, after you retire, will provide guaranteed monthly payments of $1,000 to you every month for as long as you live. Read more

Like-Kind Property

Like-kind property is property that, for tax purposes, is similar in nature to property being sold. Like-kind property is a key component of Section 1031 exchanges, which are real estate transactions in which the buyer and seller effectively swap properties in order to avoid paying capital gains tax on the sale. Read more

Limit Order

Limit orders allow you to set a price at which you want to buy or sell a stock.  Unlike market orders, your purchase or sale will go though only when the price reaches the level that you specify. Read more

Limited Liability

Limited liability is limited exposure to financial risk by investors of a company or a partnership. This exposure is usually limited to the individual's investment. Read more

Limited Liability Company (LLC)

A limited liability company (LLC) is a type of business entity formed that can be taxed like a partnership but protects its shareholders from liability beyond their investment. Investors can decide to set up any type of legal business structure they like. Read more

Limited Partner

A limited partner is a member of a partnership who cannot incur debt or obligations on behalf of the partnership and is not personally liable for those debts or obligations. Limited partners contrast with general partners, who can incur debt or obligations on behalf of the partnership and are personally liable for those debts or obligations. Read more

Limited Partnership (LP)

A limited partnership is a business formation that limits the liability of certain owners. A limited partnership is made up of partners. Read more

Limited Partnership Unit

A limited partnership unit is a piece of ownership in a limited partnership. A limited partnership is a business formation that limits the liability of certain owners. Read more

Limited Risk

In finance, limited risk describes any investing strategy intended to protect an investment or portfolio against loss. Limiting risk usually involves securities that move in the opposite direction than the asset being protected. Read more

Line of Credit (LOC)

A line of credit (sometimes called revolving credit) is a pre-arranged amount of money lent by a financial institution. Unlike a traditional loan – which is usually a lump sum payment that is repaid on a fixed schedule – a line of credit is flexible. Read more


Liquid refers to the ability to transfer hard assets to cash or the state of being in a position where one has sufficient cash on hand to accommodate any and all necessary financial obligations. Market liquidity is a financial phrase that describes the possibility of converting an asset to cash within a short period of time with minimal transaction costs while not affecting the price integrity of the asset itself. Read more

Liquid Asset

A liquid asset is cash or securities that can be converted to cash quickly. Let's assume Company XYZ has $1 million of cash on its balance sheet and $300,000 of marketable securities. Read more

Liquid Certificate of Deposit

A liquid CD allows you to withdraw money without penalty before the CD matures. These financial instruments are sometimes known as risk-free or no-penalty CDs. Read more

Liquid Market

Liquid market refers to any market in which there are many buyers and sellers present and in which transactions can take place with relative ease and low costs. A liquid market refers to any market which is always available and liquid, or clear and free flowing. Read more


In the financial world, to liquidate something means to sell it for cash. Although this sounds harmless, in the corporate world the term often carries a connotation of failure, because it is most often used in discussions about Chapter 7 -- a section of U. Read more


Liquidation refers to the selling of assets in return for cash.   The term liquidation is most often used in discussions about Chapter 7 bankruptcy -- a section of U. Read more

Liquidation Value

Liquidation value refers to the value of a project or investment if it were to be sold or abandoned immediately. Also called abandonment value, the liquidation value of a project or investment is the immediate value in cash that would be generated from liquidating a project or selling an investment. Read more


Liquidity is the ability to sell an investment at or near its value in a relatively short period of time. Let’s say you take an old painting from the attic to the local filming of Antiques Roadshow. Read more

Liquidity Risk

This expert financial definition reveals everything you need to know about mitigating, measuring, and managing liquidity risk. 

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Liquidity Trap

Liquidity trap describes the macroeconomic conditions under which interest rates cannot be pushed any lower, rendering monetary policy ineffective.  Named in reference to the associated overabundance of money held in depository savings accounts, a liquidity trap occurs upon the convergence of low interest rates and a widely-held perception of an imminent economic downturn. Read more

Listed Security

A listed security is a stock, bond, derivative, ETF, mutual fund, or other security that trades on a national exchange such as the New York Stock exchange or the Nasdaq. The Nasdaq, which stands for the National Association of Securities Dealers Automated Quotation system, is a computerized system for stock trading that does not have a physical trading floor. Read more


A load is a fee paid to purchase or sell a specific investment. It is expressed as a percentage of the amount invested. Read more

Load Fund

A load fund is a mutual fund that carries a fee to purchase or sell its shares. This load is expressed as a percentage of the amount invested. Read more


A loan is a sum of money that is borrowed by an individual or business from a lender (typically a financial institution or another party with money). Under a typical loan agreement, the lender expects the borrower to repay the loan over an agreed-upon period of time and/or with the expectation that they will pay back the loan regularly (often every month). Read more

Loan Loss Provision

A loan loss provision is an expense that is reserved for defaulted loans or credits.   It is an amount set aside in the event that the loan defaults. Read more

Loan Loss Reserves

Loan loss reserves (LLRs) are types of insurance and credit enhancement that help banks and lenders mitigate estimated losses on loans in the event of defaults or nonpayments. Should borrowers default on their loan, banks might use loan loss reserve funds to alleviate these losses. Read more

Loan Officer

There comes a time in everyone’s life where they need to finance a major purchase. It may be a car loan, a line of credit for a business, or even the cornerstone of the American dream: a home loan. Read more

Loan Sharking

Loan sharking refers to predatory lending practices by individuals or organizations (aka loan sharks) that charge extraordinarily-high interest rates. Loan sharking involves taking advantage of the borrower's weak credit or collateral condition. Read more

Loan Syndication

Loan syndication is a lending process in which a group of lenders provide funds to a single borrower. When a project is unusually large or complex, it may exceed the capacity of a single lender. Read more

Loan-to-Value (LTV) Ratio

The loan-to-value (LTV) ratio is a calculation that helps lenders measure mortgage risk. The formula to calculate the loan-to-value ratio is: Loan to value = Mortgage amount / Appraised value of property For example, let's say Jane Doe wants to buy a house for $500,000. Read more

Locked Market

A locked market, also called a daily trading limit, is the maximum gain or loss allowed on a derivative or currency in one trading day. Let's say a forward contract on Company XYZ stock has a trading limit of X. Read more


Logistics is the integration and management of the product value chain from suppliers to the customer.   It includes all aspects of the chain of production, including design, suppliers, financing, information, energy, transportation, distribution, and sales. Read more

London Interbank Offered Rate (LIBOR)

The London Interbank Offered Rate (LIBOR) is the base lending rate banks charge each other in the London wholesale money market. LIBOR is an average of inter-bank deposit rates offered by members of the British Bankers Association (BBA). Read more

London Spot Fix

The London Spot Fix occurs when the members of the London Gold Pool (five banks) have a conference call and set the price per ounce for several metals (gold, platinum, silver and palladium). To perform a fix, the members essentially determine where supply meets demand for all of the buy and sell orders that the banks have on hand. Read more

Long Bond

A long bond is a Treasury bond that is issued for an extended period of time (twenty to thirty years).   The investing public can purchase long bonds from brokers. Read more

Long Straddle

A long straddle is an options trading strategy that involves purchasing both a call option and a put option for a particular asset with identical strike prices and expiration dates. Because a long straddle involves purchasing both a call and put option with the same strike prices, a trader who uses this strategy will profit if the price of the underlying asset deviates from the original strike price in either direction. Read more

Long-Legged Doji Candlestick

Long-legged doji candlesticks are one of four types of dojis -- common, long-legged, dragonfly and gravestone. All dojis are marked by the fact that prices opened and closed at the same level. Read more

Long-Run Average Total Cost (LRATC)

Long-run average total cost (LRATC) represents the average cost per unit of production over the long run. In this calculation, all inputs are considered to be variable, because, over the long term, no costs are considered fixed. Read more

Long-Term Asset

A long-term asset is an asset that a company expects to sell or otherwise recognize the economic value of after more than one year. An asset is anything that has commercial or exchange value. Read more

Long-Term Capital Gain or Loss

A long-term capital gain or loss is the profit or loss on the sale of an investment that has been held for longer than a certain IRS-defined period of time.   Let’s assume you purchase 100 shares of Company XYZ for $1 per share. Read more

Long-Term Debt

Long-term debt is debt due in one year or more. It is a key item that appears on a company's balance sheet. Read more

Long-Term Equity Anticipation Securities (LEAPS)

Long-Term Equity AnticiPation Securities (LEAPS) is a registered trademark of the Chicago Board Options Exchange (CBOE). LEAPS are virtually identical to traditional exchange-traded options, but they expire up to three years in the future, which is much longer than traditional options' nine-month maximum. Read more

Long-Term Liability

A long-term liability is a liability due in more than one year. A liability is a claim on a company’s assets. Read more


A loophole is an exception that allows a system to be circumvented or avoided.   It usually refers to legal, taxation, or security strategies that are exploited for personal gain. Read more

Losing Your Shirt

Losing your shirt refers to an investment move resulting in a total loss of all financial assets. Meant to imply a degree of loss serious enough to warrant selling the shirt off your back, "losing your shirt" idiomatically expresses the complete loss of financial assets as a result of an unwise investment. Read more

Loss Carryback

The term "loss carryback" is where a company retroactively chooses to apply the net operating loss in the current year to the previous profitable year(s) to obtain a tax refund for monies already remitted or incurred on the profits earned in those years. For example, if a company has a net operating loss in the current year of $2,000,000, it can carry that backward to the previous year to offset its net operating income of $2,000,000. Read more

Loss Carryforward

The term "loss carryforward" refers to an accounting practice whereby companies utilize their current year's net operating loss against future year's net operating profit to reduce the taxes owed in those future profitable years. Also called tax loss carryforward, this can be utilized by individuals, corporations, or funds. Read more


A lot is a securities trade for a “standard” number of trading units. In stock trading, a lot is 100 shares (also called a "round lot"). Read more