Here are Finance dictionary terms begining with L.

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Lead Manager  a bank that takes a lead role in the issue of a corporate bond or a syndicated bank loan.

Letter of Credit  a guarantee (letter) made by a bank that a buyer of a product/service will make a payment. Should they not, then the payment will be made by the Bank.

Leverage  a company’s debt to equity ratio. Also used to describe the use of a limited amount of capital to make large financial bets on the financial markets.

Leveraged Buyout (LBO) a term used to describe the takeover of a company primarily financed by the issuance of debt in the form of bonds or bank loans by the acquiring company. Often the assets of the acquired company are used to finance the debt/loans.

Libor  London interbank offer (lending) rate. A rate of interest at which one bank will lend to another on the London interbank market. There is dollar LIBOR, Euro LIBOR, sterling LIBOR and Yen LIBOR according to which currency is being lent.

LIFFE  London International Financial Futures Exchange.

Liquidity  the extent to which a security/asset can be easily traded in large volumes with moving the price. A share or bond with high liquidity can be bought and sold quite easily and will usually have a low bid offer spread.

Liquidity Ratio  the ratio of a bank’s liquid assets to its eligible liabilities.

Listed Security  a security that receives a listing by a recognized Exchange due to it meeting the requirements of that Exchange for listing purposes. A listing usually ensures good liquidity and that the company issuing the security is committed to making certain information publicly available.

LME  London Metals Exchange.

Long Position  describes the position of a trader/institution that has a positive net holding balance in financial securities or commodities. They will benefit if the price rises.

Loss aversion refers to the tendency of people to take less risk when choosing between two potential gains,
and to take more risk when choosing between two potential  losses. For example, when offered the choice between investment opportunities A and B, where A is a  lottery ticket paying US$1 million with a 25% probability and US with a 75% probability while B generates a sure profit of US$240,000, the vast choose B. However, when the same people are offered the choice between investment opportunities A* and B*, where A* is a lottery ticket yielding a loss of S$1,000,000 with 75% probability and US with 25% probability, while B* generates a sure loss of US$750,000, virtually all choose A*, the more risky alternative. B and A* yield the most p[opular choices have a combined outcome that is US$10,000 less than A and B, no matter how the lotteries turn out.

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