| Term | Definition |
|---|---|
| L Share Annuity Class | A type of annuity share class that may have higher fees but may convert to other share classes |
| Labor Intensive | A production process that requires a large amount of labor |
| Labor Market | The market for labor |
| Labor Market Flexibility | The ease with which workers can be hired and fired |
| Labor Productivity | The amount of output produced per unit of labor |
| Labor Theory Of Value (LTV) | A theory that the value of a good or service is determined by the amount of labor required to produce it |
| Labor Union | An organization of workers that advocates for their interests |
| Laddering | A strategy of investing in bonds with staggered maturities |
| Laffer Curve | A graph showing the relationship between tax rates and tax revenue |
| Laggard | A stock or market that underperforms |
| Lagging Indicator | An economic indicator that follows economic activity |
| Laissez-Faire | A policy of minimal government intervention in the economy |
| Lambda | A measure of an option’s sensitivity to changes in the price of the underlying asset |
| Lancaster University Management School (LUMS) | A business school at Lancaster University |
| Land | Natural resources |
| Land Contract | A contract for the sale of land |
| Land Trust | A trust that holds land |
| Land Value | The value of land |
| Land Value Tax (LVT) | A tax on the value of land |
| Landlocked | Having no access to the sea |
| Landlord | A person who owns property that is rented to others |
| Lapping Scheme | A fraudulent scheme involving the theft of payments |
| Lapse | The termination of an insurance policy due to non-payment |
| Large Cap (Big Cap) | A company with a large market capitalization |
| Large Trader | A trader who trades in large volumes |
| Larry Ellison | Co-founder of Oracle |
| Last In, First Out (LIFO) | An inventory valuation method |
| Last Mile | The final stage of delivery |
| Last Trading Day | The final day on which a contract can be traded |
| Last Twelve Months (LTM) | The most recent 12 months of financial data |
| Last Will And Testament | A legal document that specifies how a person’s assets should be distributed after their death |
| Late Fee | A fee charged for late payment |
| Law of Demand | The principle that demand decreases as price increases |
| Law of Diminishing Marginal Productivity | The principle that the marginal product of labor will eventually decrease as more labor is added |
| Law of Diminishing Marginal Returns | Same as Law of Diminishing Marginal Productivity |
| Law of Diminishing Marginal Utility | The principle that the marginal utility of a good or service will eventually decrease as more of it is consumed |
| Law of Large Numbers | The principle that the larger the sample size, the more likely it is to be representative of the population |
| Law of One Price | The principle that identical goods should sell for the same price in different markets |
| Law of Supply | The principle that supply increases as price increases |
| Law of Supply and Demand | The principle that the price of a good or service is determined by the interaction of supply and demand |
| Lawful Money | Currency that is legal tender |
| Layaway | A system of purchasing goods by making periodic payments |
| Layoff | The termination of employment |
| Lead Bank | The primary bank in a loan syndication |
| Lead Time | The time between placing an order and receiving it |
| Leadership | The ability to influence others |
| Leadership Grid | A model of leadership styles |
| Leading Indicator | An economic indicator that predicts economic activity |
| Leads and Lags | The timing differences between economic indicators |
| Leakage | A withdrawal of money from the economy |
| Lean Six Sigma | A process improvement methodology |
| Lean Startup | A methodology for developing new products or services |
| Learning Curve | The rate at which learning occurs |
| Lease | A contract for the use of an asset |
| Lease Extension | An agreement to extend a lease |
| Lease Option | An agreement that gives the lessee the option to purchase the asset at the end of the lease |
| Lease Payments | Payments made under a lease |
| Lease Rate | The cost of leasing an asset |
| Leaseback | A transaction where an asset is sold and then leased back |
| Leasehold | The right to use a leased asset |
| Leasehold Improvement | Improvements made to a leased property |
| Least Squares Criterion | A statistical method |
| Least Squares Method | Same as Least Squares Criterion |
| Least-Preferred Coworker Scale | A measure of leadership style |
| Ledger Balance | The balance of an account |
| Ledger Wallet | A type of cryptocurrency wallet |
| Leg | One part of an options strategy |
| Legal Lending Limit | A restriction on the amount a bank can lend to a single borrower |
| Legal Monopoly | A monopoly granted by the government |
| Legal Rate of Interest | The interest rate allowed by law |
| Legal Separation | A legal agreement between spouses to live apart |
| Legal Tender | Currency that must be accepted in payment of debt |
| Legislative Risk | The risk of changes in laws or regulations |
| Lehman Aggregate Bond Index | A bond market index |
| Lehman Brothers | A former investment bank |
| Lehman Formula | A formula used to calculate the value of a bond |
| Lemons Problem | The problem of asymmetric information in markets |
| Lender | A person or institution that lends money |
| Lender of Last Resort | A central bank that provides loans to banks in times of crisis |
| Leptokurtic Distributions | Distributions with fat tails |
| Less-Developed Countries (LDC) | Countries with low levels of economic development |
| Lessee | A person who leases property |
| Lessor | A person who leases out property |
| Letter of Comfort | A non-binding letter expressing support for a borrower |
| Letter of Credit | A guarantee of payment |
| Letter of Guarantee | A guarantee of performance |
| Letter of Indemnity | A promise to indemnify someone against loss |
| Letter of Intent (LOI) | A preliminary agreement |
| Level 1 | A classification of assets |
| Level 2 | A classification of assets |
| Level 3 | A classification of assets |
| Level 1 Assets | Highly liquid assets |
| Level 2 Assets | Less liquid assets |
| Level 3 Assets | Illiquid assets |
| Level Death | A type of insurance policy |
| Level-Premium Insurance | Life insurance with premiums that remain constant over time |
| Leverage | The use of debt to finance an investment |
| Leverage Ratio | A measure of leverage |
| Leveraged Buyback | A company’s repurchase of its own shares using borrowed money |
| Leveraged Buyout (LBO) | The acquisition of a company using borrowed money |
| Leveraged Employee Stock Ownership Plan (LESOP) | An employee stock ownership plan that uses borrowed money |
| Leveraged ETF | An ETF that uses leverage to amplify returns |
| Leveraged Lease | A type of lease used to finance large assets |
| Leveraged Loan | A loan to a company with a high debt load |
| Leveraged Loan Index (LLI) | An index of leveraged loans |
| Leveraged Recapitalization | A company’s restructuring of its capital structure using borrowed money |
| Levered Free Cash Flow (LFCF) | Free cash flow after taking into account debt payments |
| Levy | A tax or charge |
| Liability | A debt or obligation |
| Liability Driven Investment (LDI) | An investment strategy that focuses on matching assets with liabilities |
| Liability Insurance | Insurance that covers liability for damages caused to others |
| Liar Loan | A loan with falsified information |
| Liar’s Poker | A game of chance |
| Libel | A written defamation |
| Liberty Bond | A bond issued by the U.S. government to finance World War I |
| LIBOR Curve | A graph of LIBOR rates for different maturities |
| LIBOR Scandal | A scandal involving the manipulation of LIBOR rates |
| Licensee | A person who has a license |
| Licensing Agreement | An agreement granting permission to use intellectual property |
| Licensing Fee | A fee paid for a license |
| Lien | A claim against property |
| Lien Sale | A sale of property to satisfy a lien |
| Lien Waiver | A document that releases a lien |
| Life Annuity | An annuity that pays out until the death of the annuitant |
| Life Cycle | The stages of development |
| Life-Cycle Fund | A mutual fund that invests according to an investor’s life cycle |
| Life-Cycle Hypothesis (LCH) | A theory about consumption and saving behavior |
| Life Estate | Ownership of property for the duration of a person’s life |
| Life Expectancy | The average number of years a person is expected to live |
| Life Income Fund (LIF) | A type of retirement income fund |
| Life Insurance | Insurance on a person’s life |
| Life Settlement | The sale of a life insurance policy |
| Lifestyle Creep | The tendency to increase spending as income increases |
| Lifetime Cost | The total cost of owning an asset over its lifetime |
| Term | Definition |
|---|---|
| Lifetime Learning Credit | A tax credit for education expenses |
| LIFO Liquidation | The sale of older inventory due to declining sales |
| LIFO Reserve | The difference between LIFO and FIFO inventory values |
| Lightning Network | A layer-2 payment protocol for Bitcoin |
| Like-for-Like Sales | Sales comparisons that exclude the impact of new stores |
| Like-Kind Exchange | A tax-deferred exchange of similar assets |
| Like-Kind Property | Property that is similar in nature |
| Lilly Ledbetter Fair Pay Act | A U.S. law that addresses pay discrimination |
| Limit Down | A daily limit on how much a security’s price can decline |
| Limit Order | An order to buy or sell a security at a specific price |
| Limit Order Book | A record of outstanding limit orders |
| Limited Common Elements | Areas in a condominium development that are shared by a small group of owners |
| Limited Company (LC) | A type of business organization |
| Limited Government | A government with limited powers |
| Limited Liability | A legal concept that protects owners from personal liability for business debts |
| Limited Liability Company (LLC) | A type of business organization that combines the benefits of a partnership and a corporation |
| Limited Partner | A partner in a limited partnership with limited liability |
| Limited Partnership (LP) | A type of business organization with general and limited partners |
| Limited Partnership Unit (LPU) | A unit of ownership in a limited partnership |
| Limited Power of Attorney (LPOA) | A legal document that grants someone limited power to act on another’s behalf |
| Lindahl Equilibrium | A concept in economics related to public goods |
| Line Chart | A type of chart that shows data points connected by lines |
| Line Graph | Same as Line Chart |
| Line of Best Fit | A line that best represents the data points on a scatter plot |
| Line of Business Limitations | Restrictions on the types of businesses a financial institution can engage in |
| Line of Credit (LOC) | A pre-approved loan |
| Linear Relationship | A relationship between two variables that can be represented by a straight line |
| Linearly Weighted Moving Average (LWMA) | A type of moving average |
| Linked Savings Account | A savings account linked to a checking account |
| Lintner’s Model | A model of dividend policy |
| Lipper Indexes | Indexes of mutual fund performance |
| Liquid Alternatives | Alternative investments that are relatively liquid |
| Liquid Asset | An asset that can be easily converted to cash |
| Liquid Market | A market with high trading volume |
| Liquidate | To convert assets to cash |
| Liquidated Damages | Damages specified in a contract |
| Liquidating Dividend | A dividend paid from the sale of assets |
| Liquidation | The process of converting assets to cash |
| Liquidation Margin | The amount of equity a customer must maintain in a margin account |
| Liquidation Preference | The right of preferred shareholders to receive their investment back before common shareholders in a liquidation |
| Liquidation Value | The value of a company’s assets if it were liquidated |
| Liquidator | A person appointed to oversee the liquidation of a company |
| Liquidity | The ease with which an asset can be converted to cash |
| Liquidity Adjustment Facility | A tool used by central banks to manage liquidity |
| Liquidity Coverage Ratio (LCR) | A measure of a bank’s short-term liquidity |
| Liquidity Crisis | A situation where a company or financial institution cannot meet its short-term obligations |
| Liquidity Event | An event that allows investors to sell their shares |
| Liquidity Preference Theory | A theory that investors prefer liquid assets |
| Liquidity Premium | The extra return demanded by investors for holding illiquid assets |
| Liquidity Ratio | A measure of a company’s ability to meet its short-term obligations |
| Liquidity Risk | The risk that an asset cannot be sold quickly at a fair price |
| Liquidity Trap | A situation where interest rates are very low and monetary policy is ineffective |
| Liquified Natural Gas (LNG) | Natural gas that has been cooled to a liquid state |
| Lis Pendens | A notice of a pending lawsuit |
| Lisbon Treaty | A treaty that amended the Treaty on European Union |
| Listed | Traded on an exchange |
| Listed Option | An option that is traded on an exchange |
| Listed Property | Property that is listed for sale |
| Listed Security | A security that is traded on an exchange |
| Listing Agreement | An agreement between a company and an exchange |
| Listing Requirements | Requirements that a company must meet to be listed on an exchange |
| Litecoin Mining | The process of verifying Litecoin transactions |
| Living Trust | A trust created during a person’s lifetime |
| Living Wage | A wage that is sufficient to meet basic needs |
| Living Will | A legal document that specifies a person’s wishes regarding medical treatment |
| LLC Operating Agreement | A document that governs the operation of an LLC |
| Lloyd’s Of London | A marketplace for insurance |
| Load | A sales charge on a mutual fund |
| Load Fund | A mutual fund that charges a load |
| Loan | Money borrowed |
| Loan Application Fee | A fee charged to apply for a loan |
| Loan Commitment | A promise to lend money |
| Loan Committee | A committee that approves loans |
| Loan Constant | A factor used to calculate mortgage payments |
| Loan Credit Default Swap (LCDS) | A credit derivative that transfers the risk of loan default |
| Loan Credit Default Swap Index (Markit LCDX) | An index of LCDS |
| Loan Grading | The process of assessing the creditworthiness of a borrower |
| Loan Life Coverage Ratio (LLCR) | A measure of a borrower’s ability to repay a loan |
| Loan Lock | A guarantee of an interest rate on a mortgage |
| Loan Loss Provision | An expense set aside to cover potential loan losses |
| Loan Modification | A change to the terms of a loan |
| Loan Note | A document that evidences a loan |
| Loan Officer | A person who originates loans |
| Loan Participation Note (LPN) | A note representing a participation in a loan |
| Loan Production Office (LPO) | A branch office of a lender |
| Loan Servicing | The administration of a loan |
| Loan Shark | A person who lends money at very high interest rates |
| Loan Stock | Debt securities issued by a company |
| Loan Syndication | A group of lenders who jointly provide a loan |
| Loan-to-Cost Ratio (LTC) | The ratio of a loan to the cost of a project |
| Loan-to-Deposit Ratio (LDR) | The ratio of a bank’s loans to its deposits |
| Loan-to-Value (LTV) | The ratio of a loan to the value of the asset |
| Lobby | To influence legislation |
| Local Tax | A tax levied by a local government |
| Lock In Profits | To sell an asset to secure profits |
| Lock-Up Agreement | A restriction on the sale of shares |
| Lock-Up Period | The period during which shares cannot be sold |
| Lockbox Banking | A service where payments are sent directly to a bank |
| Locked In | Unable to sell an asset |
| Locked-In Retirement Account (LIRA) | A type of retirement account |
| Log-Normal Distribution | A statistical distribution |
| Logarithmic Price Scale | A type of chart scale |
| Logistics | The process of planning and coordinating the movement of goods |
| London Interbank Bid Rate (LIBID) | The rate at which banks bid for funds in the London interbank market |
| London InterBank Offered Rate (LIBOR) | A benchmark interest rate |
| London Metal Exchange (LME) | A commodity exchange |
| London Stock Exchange (LSE) | A stock exchange |
| Long Hedge | A strategy used to protect against rising prices |
| Long Jelly Roll | A complex options strategy |
| Long Position (Long) | Owning an asset |
| Long Put | The right to sell an asset |
| Long Run | A period of time long enough for all inputs to be varied |
| Long Straddle | An options strategy |
| Long Synthetic (Synthetic Put) | An options strategy that replicates a long put position |
| Long Tail | The portion of a distribution with low probability |
| Long Term | A period of time greater than one year |
| Long-Legged Doji | A candlestick pattern |
| Long-Run Average Total Cost (LRATC) | The average cost of production in the long run |
| Long/Short Equity | An investment strategy |
| Long/Short Fund | A hedge fund that uses a long/short equity strategy |
| Long-Tail Liability | A liability that may not be discovered for many years |
| Long-Term Assets | Assets that are expected to be held for more than one year |
| Long-Term Capital Gain or Loss | A capital gain or loss on an asset held for more than one year |
| Long-Term Capital Management (LTCM) | A hedge fund |
| Long-Term Care (LTC) Insurance | Insurance that covers the cost of long-term care |
| Term | Definition |
|---|---|
| Long-Term Debt to Capitalization Ratio | A measure of a company’s financial leverage |
| Long-Term Debt to Total Assets Ratio | A measure of a company’s financial leverage |
| Long-Term Equity Anticipation Securities (LEAPS) | Long-term options |
| Long-Term Growth (LTG) | Sustainable growth over a long period |
| Long-Term Incentive Plan (LTIP) | A type of employee compensation plan |
| Long-Term Investments | Investments held for more than one year |
| Long-Term Liabilities | Liabilities due in more than one year |
| Longitudinal Data | Data collected over a period of time |
| Look-Alike Contracts | Contracts that are similar to existing contracts |
| Lookback Option | An option where the payoff is based on the highest or lowest price of the underlying asset over a period of time |
| Loophole | A legal way to avoid a rule or law |
| Lorenz Curve | A graph showing income inequality |
| Loss Adjustment Expense (LAE) | Expenses incurred in settling insurance claims |
| Loss Carryback | The ability to use current losses to offset past profits |
| Loss Carryforward | The ability to use current losses to offset future profits |
| Loss Development | The process of estimating ultimate losses |
| Loss Given Default (LGD) | The percentage of a loan that is expected to be lost in the event of default |
| Loss Leader Strategy | A strategy of selling a product below cost to attract customers |
| Loss Payee | A party that receives payment for a loss |
| Loss Ratio | A measure of an insurance company’s profitability |
| Loss Reserve | An estimate of future insurance claims |
| Lost Decade | A period of economic stagnation |
| Lost Policy Release (LPR) | A document that releases a lost insurance policy |
| Lot (Securities Trading) | A standard unit of trading |
| Love Money | Money invested by friends and family |
| Low Exercise Price Option (LEPO) | An option with a low strike price |
| Low-Hanging Fruit | Easy tasks to accomplish |
| Low-Income Housing Tax Credit | A tax credit for investing in low-income housing |
| Low Interest Rate Environment | A period of low interest rates |
| Low/No Documentation Loan | A loan with minimal documentation |
| Low Volume Pullback | A price decline with low trading volume |
| Lower of Cost or Market Method | An inventory valuation method |
| Loyalty Program | A program that rewards repeat customers |
| Ltd. (Limited) | A designation for a limited liability company |
| Lucrative | Profitable |
| Luhn Algorithm | An algorithm used to validate credit card numbers |
| Lump-Sum Payment | A single payment |
| Luxury Item | A non-essential good or service |
| Luxury Tax | A tax on luxury items |