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Financial dictionary terms starting with “l”
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." See More.
Labor intensive is used to describe any production process that requires higher labor input than capital input in terms of cost. See More.
Labor market flexibility is the degree to which a company is able to modify its labor force to maximize productivity. See More.
Labor productivity measures the hourly productive output for a country's economy during a period of time. See More.
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. See More.
A labor union is an organization that advocates for workers' rights and benefits through collective bargaining. See More.
Labor-sponsored venture capital corporations (LSVCCs) are Canadian venture capital companies established by labor unions. See More.
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. See 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. See More.
Lady Godiva accounting principles (LGAP) are informal, unofficial accounting principles under which companies make disclosures beyond what generally accepted accounting principles (GAAP) require. See More.
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. See More.
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. See More.
Laggard describes a stock that fails to perform as well as the overall market or a group of peers. See More.
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. See More.
A lagging indicator is a financial gauge that becomes measurable only after an economic shift has taken place. See More.
Laissez faire is a capitalist precept that states that market economies function at optimal efficiency in the absence of government regulation. See More.
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. See More.
The Lanchester strategy is a marketing strategy named after Frederick W. Lanchester, who wrote about World War II war strategies. See More.
A land contract is a contract in which the buyer of a property agrees to pay the seller in scheduled installments. See More.
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. See More.
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. See More.
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. See More.
A landlord is an individual who owns real estate that he or she leases to renters. See More.
A landominium is a housing community in which residents own the housing units as well as the land on which they are built. See More.
A lapping scheme is a fraudulent accounting practice that hides stolen cash by overlapping successive receivables. See More.
Generally speaking, large cap companies have at least $8 billion of market capitalization. See More.
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. See More.
The large value transfer system (LVTS) is a wire system in Canada that allows banks to transfer funds among each other. See More.
A large-value stock is a stock whose intrinsic value is greater than its market value. See More.
Last fiscal year (LFY) refers to a company's most recent completed fiscal year. See More.
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 produ See More.
The last trading day is the last time traders may trade a derivative contract before it expires. See More.
Last twelve months (LTM), also known as trailing twelve months (TTM), is the 12-month interval occurring before a given point in time. See More.
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 lea See More.
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. See More.
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. See More.
Last-sale reporting refers to the submission of trade details in the Nasdaq market. See More.
Late majority refers to the last large group of people to adopt a new product or technology. See More.
Late-day trading is the practice of illicitly recording trades executed after hours as having occurred prior to the end of market trading. See More.
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. See More.
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. See More.
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. See More.
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, a See 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. See More.
Layered fees are management fees, typically in investment products, that investors pay to financial managers for the same group of assets. See More.
Lead banks grease the skids for bringing securities to market. Issuers compensate them for this by paying a spread, which is the difference between what the issuer receives per share and what the underwriter sells the shares to the subscribers for. F See More.
Lead time is a crucial part of managing a manufacturing business or any business that involves waiting for supplies or products to arrive. Generally, the lower the lead time, the more flexible a company is and the faster it can respond to changes in See More.
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. See More.
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. See More.
A leading indicator is an index, stock, report or other measurement that signals the economy or market's direction in advance. See More.
Leakage occurs when money leaves an economy. In the investor relations world, leakage also refers to the unauthorized or unanticipated dissemination of information. See More.
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. See More.
There are many kinds of leases. Some allow the lessee to buy the asset at the end of the lease term, some do not, for example. Regardless, a lease is a legal contract, and violating a lease can result in monetary damages or other remedy by a court. G See More.
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. For example, there are two general types of leases: operating lea See More.
Lease-to-own contracts can be very helpful in the case of musical instruments and children, but they can also be very costly. Furniture, for example, is a popular thing to lease-to-own. Often, customers don’t have the cash or credit to purchase See More.
Leaseholds designate which assets aren't really the lessee's property. Accordingly, these are assets that companies must account for them in particular ways. See More.
Leasehold improvements make assets more useable and, in many cases, more marketable. Sometimes, landlords will pay for leasehold improvements in order to entice a tenant to rent a space for a long period of time. Leasehold improvements are ofte See More.
Legacy assets became a hot topic during the financial downturn of 2008, because many struggling banks had them on their balance sheets and were having trouble attracting the capital they needed to stay in business. The assets, virtually worthless, we See 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. See More.
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. See More.
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. See More.
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. See More.
A letter of intent is a non-binding document detailing a planned action on the part of an organization or individual. See More.
A level I quote is the current best bid and offer for a security that trades on the Nasdaq or over-the-counter markets. See More.
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. See More.
A level III quote is pricing information made available to registered Nasdaq market makers. See 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." See 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 s See More.
A leverage ratio is meant to evaluate a company’s debt levels. The most common leverage ratios are the debt ratio and the debt-to-equity ratio. See More.
A leveraged buyout (LBO) is a method of acquiring a company with money that is nearly all borrowed. See More.
A levy is the seizure of property in order to repay debt. In the U.S., the IRS has the authority to levy. (For everybody else, this is called foreclosure or repossession.) See More.
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 See More.
Liability matching is an investing strategy for investors who need to fund a series of future liabilities. See 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. See More.
A lien sale is the sale of a lien by a relevant authority to a third party in an effort to recoup money owed. See More.
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. See More.
The life-only option, which is generally associated with annuities, describes the contractual arrangement whereby annuity payments cease upon the owner's death. See More.
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. See More.
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. See More.
A like-kind exchange, also called a Section 1031 exchange, is a real estate transaction in which the buyer and seller effectively swap properties in order to avoid paying capital gains tax on the sale. See More.
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 pro See More.
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. See More.
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. See More.
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. See More.
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 oblig See More.
A limited partnership is a business formation that limits the liability of certain owners. See More.
A limited partnership unit is a piece of ownership in a limited partnership. See More.
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. See More.
A line of credit (LOC) is an arranged amount of standing credit that a bank's customer may draw upon at any time. See 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. See More.
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. See 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 See More.
Liquidation value refers to the value of a project or investment if it were to be sold or abandoned immediately. See More.
Liquidity risk is the risk that a company or bank may be unable to meet short term financial demands. This usually occurs due to the inability to convert a security or hard asset to cash without a loss of capital and/or income in the process. See More.
Liquidity trap describes the macroeconomic conditions under which interest rates cannot be pushed any lower, rendering monetary policy ineffective. See More.
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. See More.
The Little Board is a nickname for the American Stock Exchange (AMEX). The AMEX is a stock and options exchange in New York. The AMEX was called the New York Curb Market until 1953 because it started on the street near the New York Stock Exchang See More.
A load is a fee paid to purchase or sell a specific investment. It is expressed as a percentage of the amount invested. The term is most often used when discussing mutual funds. See More.
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. See 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). See More.
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. See More.
Loan loss reserves are accounting entries banks make to cover estimated losses on loans due to defaults and nonpayment. See More.
Loan sharking refers to predatory lending practices by individuals or organizations (aka loan sharks) that charge extraordinarily-high interest rates. See More.
Loan syndication is a lending process in which a group of lenders provide funds to a single borrower. See More.
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 See More.
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. See 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 See More.
The London Interbank Offered Rate (LIBOR) is the base lending rate banks charge each other in the London wholesale money market. See More.
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). See More.
A long bond is a Treasury bond that is issued for an extended period of time (twenty to thirty years). See More.
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. See More.
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. If prices close very close to the same level (so that no See More.
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. See More.
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. See More.
Long-term debt is debt due in one year or more. It is a key item that appears on a company's balance sheet. See More.
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 m See 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. See More.
Losing your shirt refers to an investment move resulting in a total loss of all financial assets. See More.
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 See More.
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 See More.