Glossary L

The financial world is full of jargon - i.e. strange words no-one understands. Here we try to explain some of the many technical terms.

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L

Lawsuits

Bad news for that company you have invested in, especially in the US, which is incredibly litigious.

LBO - Leveraged Buy Out

A takeover funded by (huge) debt, the idea being that -somehow- crippling debts are not in the least way 'bad' and in fact make companies more efficient; there is I believe a rigorously-proved theorem from the world of economics which supports this.

LEAPS

Long-term stock or index options.

Leverage

If you think you really know where the market is going, and that it is a sure thing, then obviously you want to trade. It may be that you do not have enough cash to buy enough shares to make a decent profit, so it seems a waste of time; however, with the money you do have you could buy options - these usually cost only a small percentage of the equivalent value in shares, so you can use these derivatives, to effectively multiply - i.e. leverage - the value of your stake.

Limit Order

An order to buy or sell at, or better than a specific price.

Limit Price

When you ask a broker to buy or sell shares you can set a limit price - this is the maximum price you want to pay, if you are buying, or the minimum you would like to receive, if you are selling. Can get cancelled if not be satisfied within a set time.

Liquidity

The readiness to buy or sell significant quantities of a security at any time.

Load

Sales commission.

Long

'Going long' means to buy. See short.

It is unclear where these expressions originated, especially as a simple 'buy' and 'sell' seem so much clearer, but their usage is widespread so one has to be aware of what they mean.

Long Range Order

Is there any in the financial markets?

Long Term Notes Payable

US accountancy term. Usually means secured loans that will not be due for more than a year.

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