Line of Credit Understanding between customer and his bank, that may be informal, to establish a loan balance with a specific maximum limit. The bank allows the customer to draw funds from this loan or credit over a predetermined period of time until the maximum loan limit is … [Read more...]
Linear Programming
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Linear Programming Technical tool used for determining the maximum value of any equation when some stated linear constraints are considered. … [Read more...]
Linear Regression
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Linear Regression Technique used in statistical analysis representing a given set of data points using a straight line touching each point. … [Read more...]
Linter’s Observations
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Linter's Observations A 1956 research conducted by John Lintner's suggesting that dividend policy is linked to a level of dividends that is targeted and the pace at which adjustment occurs in changes in dividends. … [Read more...]
Lipper Indexes
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Lipper Indexes Index series tracking the financial performance of many types of mutual funds. Allows investors to measure a mutual fund investment against an index of 30 funds. … [Read more...]
Liquid Asset
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Liquid Asset Cash or highly liquid short term securities that can be converted to cash easily and with minimum cost. … [Read more...]
Liquid Yield Option Note (LYON)
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Liquid Yield Option Note (LYON) Convertible bond created by Merrill Lynch & Co that comes with zero coupon rate, is callable and puttable. … [Read more...]
Liquidating Dividend
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Liquidating Dividend Distribution of payment from capital funds instead of earnings by a company to its owners. … [Read more...]
Liquidation
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Liquidation Related to buy in, evening up, offset liquidity. -Termination of a firm's business, wherein assets are sold off and the proceeds realized are used to pay creditors. Any balance left over is shared among shareholders. - Transactions or trading positions that offset … [Read more...]
Liquidation Preference
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Liquidation Preference Related to venture capital contracts. Specifies priority of payment and amount of payment for investors in event of liquidation of the business. Helps insulate venture capitalists from sustaining losses by ensuring payback of original investment on priority. … [Read more...]
Liquidation Value
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Liquidation Value The amount of funds (net) that can be realized after the debts of the firm are paid back from the proceeds of sale of assets. … [Read more...]
Liquidator
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Liquidator Individual designated by unsecured creditors in the UK to supervise the sale of any insolvent company’s assets and to repay debts owned by it … [Read more...]
Liquidity
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Liquidity A high degree of trading in a market shows that it is liquid. Selling and buying occurs with least price disturbance. Also refers to a market where it is relatively easy to buy and sell. … [Read more...]
Liquidity Diversification
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Liquidity Diversification Investment strategy whereby a number of maturities are opted for rather than long bonds that expose the investor to price risk. … [Read more...]
Liquidity Path
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Liquidity Path The strategy followed by a business to provide liquidity for the owners. Most common strategies or methods are mergers and acquisitions to a bigger company, IPOs to the public. … [Read more...]
Liquidity Premium
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Liquidity Premium Denotes the difference between forward rate and expected short-term interest rate in the future. … [Read more...]
Liquidity Ratios
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Liquidity Ratios A measure (in the form of a ratio) of a firm's ability to fulfill its financial short-term obligations without delay. … [Read more...]
Liquidity Risk
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Liquidity Risk A risk arising during the sale or liquidation of any asset. Also represented as the difference between the likely price of an asset, less commissions and its true value. … [Read more...]
Liquidity Theory of the Term Structure
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Liquidity Theory of the Term Structure Theory of biased expectations stating that implied forward rates will be an objective estimate of the expectations in the market, of future interest rates. This is because a liquidity premium is embodied within. … [Read more...]
Liquidity Squeeze
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Liquidity Squeeze Hesitation among financial institutions to lend funds from reserves owing to concern regarding short-term availability of money. This causes the interbank market rate to rise, increasing the cost of interbank borrowing. … [Read more...]
