A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z

L

Lagging Indicators

Economic indicators that lag behind the general pace of economic activity.

Large Capitalization (Large Cap)

The capitalization of a stock is determined by multiplying the number of outstanding shares times the price of the shares. Large cap stocks generally have more than $5 billion of capitalization.

Law of Large Numbers

In financial analysis, a theory that indicates beating large numbers, for example large numbers of investors, is very difficult if not impossible to achieve. This law is part of the rationalization for the use of passive management. Money managers will have a difficult time beating large numbers of investors (the market) over longer time periods.

Leading Indicators

Economic indicators that can be used to predict the future direction and strength/weakness of the U.S. economy.

Less Developed Countries (LDC)

Countries that are not fully industrialized or lack sophisticated financial and legal systems. Sometimes referred to as Third World countries of Emerging Markets. Most LDCs are in Asia, South America, and Africa.

Level Load

A sales charge that is used to pay commissions and does not change over time. Mutual funds that pay level loads are called C Shares. Level loads are a way for a representative to earn continuous commissions from investor assets.

Leveraged Buyout (LBO)

A debt-financed takeover of a company.

Life Cycle

The economic life of people. Investment goals and tolerance for risk change as they move through different phases of their lives: asset accumulation, early retirement, late retirement, etc.

Life Expectancy

Based on the calculations of an actuary, the number of years an average person can be expected to live.

Limited Discretion

Agreement between a broker and investor that allows the broker to make specified trades without the investor's approval in advance.

Liquid Asset

An asset that is quickly and easily convertible into cash. For example, shares in a money market fund.

Liquidity

A security with enough outstanding shares to make their purchase and sale fast, easy transactions.

Listed Security

Stocks and bonds that are listed on one of the U.S. exchanges.

Load

A sales charge that is paid by investors when they purchase investment and insurance products that pay commissions to financial advisors. Funds that don't have sales charges are called no-loads.

Long Bond

A bond that matures in 10 years or more.

Long Term

A holding period of more than 12 months that is used to calculate capital gains taxes.

Long Term Gain

Gain on the sale of an asset when the holding period is more than 12 months.

Long Term Goals

Financial goals that an individual sets for seven years or longer, for example a goal of a secure, comfortable retirement.

Long Term Loss

A long-term loss occurs when an asset is held for more than 12 months and is sold at a lower price than its adjusted purchase price.

Low Grade

Bond

Bond rating of B or lower.

Lump Sum

A sum of money that is paid to an investor at one time versus a series of payments. For example, an investor takes a lump sum distribution from a 401k plan.