|Laissez faire: The belief
that government intervention in business should be
|Latent Defect: A problem
or defect that cannot be discovered through normal
examination and that is not noticed by the seller
when turning the product or service over to the
buyer. Such defects often become noticeable after
a product or service has been delivered. Assets
such as real estate, automobiles, and machinery
most frequently have latent defects because it is
difficult to check every possible source of future
problems before the sale to the new owner.
|Leading Economic Indicator:
Twelve ratios tracked by the U.S. Department of
Commerce as indications of economic activity.
|Lease: A long-term rental
agreement. Lease term-Length of time a lease is in
full force. Lease year-Any period of 12
consecutive months, starting from the first day of
|Lessee: Tenant who pays
rent in return for the right to use office or
store space, warehousing, or a building for any
|Lessor: Landlord who
receives payment for renting out the building or
|Letter of Credit: A
document provided by a bank on behalf of a
customer guaranteeing that a debt will be paid up
to a certain amount. Such letters are often
necessary in international deal- mgs.
|Letter of Intent: Good
faith agreement signed by tenant and landlord
prior to lease, setting forth major terms and
|Letter of Representation:
Agreement between ten- ant and broker giving
broker exclusive rights to locate and negotiate
for office space.
|Leverage: An arrangement in
which one can use a small investment to control a
larger investment, such as stock options or margin
on a purchase of stock.
|Liabilities: Debts, what a
company owes including long term debt such as
bonds they may have issued.
|Lien: A lender's claim to
assets, usually as a guarantee against a loan.
|LIFO -Last In, First Out:
An accounting method for valuing inventory that
assumes that the last or most recently produced
item is the next item to be sold.
|Limited Partnership: A form
of a partnership com- posed of a general manager
responsible for the day-to-day management of the
business and several limited partners who invest
money but who have limited involvement in the
management of the firm and, hence, limited
liability for its financial obligations.
|Line of Credit: An
agreement between a lender and borrower allowing
the borrower to draw on a pool of money up to an
|Liquidity: How easily an
investment can be converted to cash at its present
|Liquid Assets: Cash or
assets that can be easily converted into cash.
|Liquidated Damages: The
amount of money one individual or business agrees
to pay another in the event that they breach a
contract signed by both parties. Liquidated
damages are calculated as part of the contract, so
that both par- ties know at the outset what it
will cost them if they are responsible for a
breach of contract.
|Load: The sales commission
charged by a mutual fund.
|Long Ė Go Long: Owning a
stock or a call option.
Payment of the entire amount due at one time
rather than in installments.
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