Lagging indicators
Market indicators showing the general direction of the
economy and confirming or denying the trend implied by the leading indicators
or concurrent indicators.
Lame Duck
A defaulter on a Stock Exchange who is not able to meet his
market commitment and financial obligations of his business.
LIBOR - London Interbank Offer Rate
Often used as a basis for pricing Euroloans. LIBOR
represents the interest rate at which first class banks in London are prepared
to offer dollar deposits to other first class banks. There are a number of
similar rates like HIBOR (Hong Kong Interbank Offer Rate); SIBOR (Singapore
Interbank Offer Rate); TIBOR (Toronto Interbank Offer Rate).
Last In First Out - LIFO
An inventory cost accounting procedure in which the last
item manufactured is assumed to be the first one sold by the company.
Law of one price
An economic rule stating that a given security must have
the same price regardless of the means by which one goes about creating that
security. This implies that if the payoff of a security can be synthetically
created by a package of other securities, the price of the package and the
price of the security whose payoff it replicates must be equal.
Lay Off
The sell off by an issuer of any or all unsubscribed shares
in a rights offering to the underwriters at the subscription price.
Leading indicators
Market indicators that signal the state of the economy for
the coming months.
Lead Manager
The merchant banker(s) associated
with the issue and responsible for due diligence and other associated issue
related activities.
Legal risk
The risk of loss because a law or
regulation is applied in an unexpected way or because a contract cannot be
enforced.
Letter of offer
A letter of offer is a document
addressed to the shareholders of the target company containing disclosures of
the acquirer/ (Persons Acting in Concert) PACs, target company, their
financials, justification of the offer price, the offer price, number of shares
to be acquired from the public, purpose of acquisition, future plans of
acquirer etc.
Leverage
The use of borrowed money to
finance an investment.
Leveraged Buyout
The purchase of shares usually by
the management of a company using its own assets as collateral for loans
provided by banks or insurance company.
Liabilities
Any claim for money against the
assets of a company, such as bills of creditors, income tax payable, debenture
redemption, interest on secured and unsecured loans, etc. Although on balance
sheet shareholder’s equity is shown under liability, it has no claim on the
assets of a company, unless it goes into liquidation.
Limit Order
An order to buy or sell a
specified number of shares of a security when a specified price is reached.
Line Business
Brokers who have teleprints in
their office communicate the quantity, price etc., as soon as deals are struck,
for onward transmission to their branch offices. This is known as line
business. It also includes arbitrage.
Liquidation
The process of converting stocks
into cash. Also means the dissolution of a company.
Liquidity Adjustment Facility (LAF)
Under the scheme, repo auctions
(for absorption of liquidity) and reverse repo auctions (for injection of
liquidity) will be conducted on a daily basis (except Saturdays). It will be
same-day transactions, with interest rates decided on a cut-off basis and
derived from auctions on a uniform price basis.
Liquid Assets
Proportion of listed unit trust’s
or mutual fund portfolio that is kept in cash or easily encashable assets to
meet any request for redemption.
Liquidity Risk
The risk that a solvent
institution is temporarily unable to meet its monetary obligations.
Listed Company
A company which has any of its
securities offered through an offer document listed on a recognised stock
exchange and also includes Public Sector Undertakings whose securities are
listed on a recognised stock exchange.
Listing
Formal admission of a security
into a public trading system
Listing Agreement
An
agreement which has to be entered into by companies when they seek listing for
their shares on a Stock Exchange. Companies are called upon to keep the stock
exchange fully informed of all corporate developments having a bearing on the
market price of shares like dividend, rights, bonus shares, etc.
Load
A sales charge assessed by
certain mutual funds (load funds) to cover selling costs. A front end load is
charged at the time of purchase. A back-end load is charged at the time of
sale.
Load fund
A Load Fund is one that charges a
percentage of Net Asset Value (NAV) for entry or exit.
Locked or Crossed Quotations (U.S)
A temporary condition, normally
associated with fast-moving, active markets, where the asking price of one
market maker in a given security is the same or lower than the bid price of
another market maker, thereby producing locked or crossed markets respectively.
Lock in Trade
A securities transactions in
which all the terms and conditions to the transactions are irrevocably accepted
by the buyer and seller.
Long Position
A position showing a purchase or
a greater number of purchases than sales in anticipation of a rise in prices. A
long position can be closed out through the sale of an equivalent amount.
Loss on Security Provisions
The risk that changes in security
prices may lead to capital losses.
LP (Liquidity Premium)
Additional return required to
compensate investors for purchasing illiquid assets.