Investing Advice

Definitions of Investing, Legal, & Business Terms

  Investing Term Dictionary
Choose below the first letter of the investment term you would like defined.
Laissez faire: The belief that government intervention in business should be minimal. 
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 a month.
Lessee: Tenant who pays rent in return for the right to use office or store space, warehousing, or a building for any purpose.
Lessor: Landlord who receives payment for renting out the building or space..
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 conditions.
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 established limit.
Liquidity: How easily an investment can be converted to cash at its present full value.
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.
Lump-sum Distribution: Payment of the entire amount due at one time rather than in installments.
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