Leveraged Buyout (LBO) An arrangement by which a transaction is undertaken to take a public corporation private. Debt such as bank bonds and loans are used for this purpose. Owing to the large proportion of debt as compared to equity in the new entity, the bonds issued are … [Read more...]
Leveraged Equity
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Leveraged Equity The stock of a company that depends on financial leverage. These stock holders derive the costs and benefits and costs of using debt and also face the same risks. … [Read more...]
Leveraged ETF
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Leveraged ETF ETF (exchange-traded fund) that amplifies the returns of an underlying index by using financial derivatives and debt. The strategy used is to maintain a constant leverage during the investment period, such as 2:1 or 3:1 ratio. … [Read more...]
Leveraged Lease
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Leveraged Lease An arrangement for a lease where the lessor borrows a large portion of the amount needed to buy the asset. In exchange he grants the creditor a lien on the same assets and a pledge of the repayments secure the loan. … [Read more...]
Leveraged Portfolio
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Leveraged Portfolio Portfolio where some assets are risky ones that have been financed through borrowings. … [Read more...]
Leveraged Required Return
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Leveraged Required Return The return that is required to be derived from an investment when the investment is funded by debt to some extent. … [Read more...]
Liability
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Liability A cash payment or financial obligation that is made at a given time to fulfill an obligation’s terms of contract. … [Read more...]
Liability Funding Strategies
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Liability Funding Strategies Investing strategy that selects assets in such a manner that cash flows from these equal or exceed the obligations of the client. … [Read more...]
Liability Swap
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Liability Swap Technique used to align liabilities of a firm with its assets. An interest rate swap is used to restructure the liabilities’ cash flow characteristics to do this. … [Read more...]
LIBOR
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LIBOR The rate of interest that is charged by major international banks located in London for borrowings from each other. Stands for London Interbank Offered Rate. Several variable rates of interest in the U.S. are dependent on spreads off of this rate. Several different LIBOR … [Read more...]
Limit Order Book
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Limit Order Book The specialist’s record detailing unexecuted limit orders. These orders get the same order of priority with respect to execution as other orders. … [Read more...]
Lien
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Lien An interest or claim granted over assets of a business to its creditors/ lenders in secured debt financing in exchange for funds. … [Read more...]
Lifetime Cap
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Lifetime Cap Maximum rate of interest that can be charged at any point during the term of an adjustable-rate mortgage (ARM). Usually expressed as a percentage increase from an original interest rate. Such caps are part of a mortgage's interest rate cap structure. … [Read more...]
LIFO (Last-in-First-out)
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LIFO (Last-in-First-out) Inventory valuation methodology wherein the cost of the most recent or last bought item in the inventory is used to measure the total inventory. … [Read more...]
Lifting a Leg
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Lifting a Leg Offsetting or closing out one side or one position of a long-short arbitrage before closing the other. … [Read more...]
Limit Order
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Limit Order Instruction given by investor to execute a buy transaction at or below a given price or to execute a sell transaction at or above a given price. The account holder or customer specifies the price that the order should be executed at. This is a conditional trading … [Read more...]
Limit Up
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Limit Up Maximum amount of increase that is possible in the price of a commodity futures contract in one trading day. … [Read more...]
Limitation on Asset Dispositions
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Limitation on Asset Dispositions A covenant contained in a bond wherein any major asset sales by the company are restricted. … [Read more...]
Limitation on Liens
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Limitation on Liens A covenant contained in a bond restricting a company’s ability to grant liens that are placed on the assets of the company. … [Read more...]
Limitation on Merger, Consolidation, or Sale
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Limitation on Merger, Consolidation, or Sale A covenant contained in a bond restricting a company’s ability to enter agreements with another firm for merging or consolidating operations. … [Read more...]
