Glossary of Financial Terms — K, L 

Glossary_KL 

  

 

 


Terms


Labor Force

Those people either who have jobs or who are looking for work. the figures are obtained through monthly inquiry from a rotating sample of households.

 

back to top

 


Labor Force Participation Rate

The labor force as a percentage of the total population.

 

back to top

 


Laddering

A fixed income portfolio strategy in which assets are distributed evenly over a range of maturities.

 

back to top

 


Leading Indicators

Those economic statistics that in the past have turned up or down in advance of the general business situation. The Leading Indicator Index is a composite of several such series. There are also Coincidental Indicators (that move with the situation) and Lagging Indicators (that move after the situation).

 

back to top

 


Legality

The legal status of a bond generally used to indicate whether it is a legal investment for savings banks in Connecticut, Massachusetts, New Hampshire, New Jersey and/or New York. Also called Legal Status.

 

back to top

 


Legal List

A list of prime investments selected by various states, into which certain institutions and fiduciaries may invest their funds.

 

back to top

 


Leg-In

To execute the first side of a spread trade. This presumes that each side is done separately to establish the spread.

 

back to top

 


Lehman Brothers U.S. TIPS index

An index is a statistical yardstick, composed of a basket of securities defined by a set of characteristics. The Lehman Bothers U.S. TIPS index is considered a benchmark for funds investing primarily in real return bonds.

 

back to top

 


Less the Reallowance

Refers to a trade between two NASD member dealers of an item subject to syndicate restrictions at the maximum permissible discount. Often abbreviated as “less the re.”

 

back to top

 


Letter of Intent

Interim agreement that summarizes the main points of a proposed deal, or confirms that a certain course of action is going to be taken. Normally, it does not constitute a definitive contract but signifies a genuine interest in reaching the final agreement subject to due diligence, additional information, or fulfillment of certain conditions. The language used in writing a letter of intent is of vital importance, and determines whether it is only an expression of intent or an enforceable undertaking. Also called ‘memorandum of understanding’ or ‘precontract’.

 

back to top

 


Leverage

1. The effect of the use of senior capital (bonds and preferred stocks) over junior capital (common stock) in capitalizations.

2. A measurement of a portfolio’s exposure to market risk.

 

back to top

 


Liability-Driven Investing

Many institutional investors have liabilities they must pay in the future, such as the retirement benefits that pension funds pay. To meet these future obligations, pension funds, and other institutions invest in a pool of assets with the goal of paying their future liabilities from the returns on those assets. One way institutions can meet their liabilities is to construct a portfolio of assets—usually longer-dated bonds—that generates cash flows matching the liability cash flows.

 

back to top

 


Lifting a Leg

Closing out one side of a spread trade by making the transactions with the securities involved individually to eliminate the spread.

 

back to top

 


Limit

The maximum daily price change of a futures contract above or below the previous day’s settlement price.

 

back to top

 


Limit Order

An order to buy or sell at a specific price or better.

 

back to top

 


Lipper Indexes

A series of indexes that tracks the financial performance of different types of mutual funds. Lipper, which is owned by Reuters, allows investors to benchmark the performance of a mutual fund against an index of 30 funds that all belong in a particular investment category.

 

back to top

 


Liquidity

The ability to convert an investment into cash promptly with a minimum risk of principal.

 

back to top

 


Liquidity Preference

The increased willingness of investors to hold issues that are more liquid. In the Treasury market, where the shorter maturity issues are generally more liquid, the yield curve often has a rising (positive) shape due in part to liquidity preference.

 

back to top

 


Liquidity Premium

The extent to which yields are lower on more liquid securities die to the relative ease with which such securities can be bought or sold in the secondary market.

 

back to top

 


Listed

An issue traded on the New York Stock Exchange or other major exchange.

 

back to top

 


Loan-to-Value Ratio

The relationship between the amount of a mortgage loan and the appraised value of the property, expressed as a percentage of the appraisal value.

 

back to top

 


Lock

When both the buyer and the seller wish to execute at the same price and neither wants to concede the commission to the broker to execute the transaction.

 

back to top

 


London Interbank Offering Rate

Every morning, banks submit to Reuters Group PLC what it would cost them to borrow money across 10 currencies and 15 maturities ranging from overnight to a year. High and low groups are thrown out, and a Libor is dispatched to trading desks globally.

 

back to top

 


Long (Position)

Signifies an investment holding expected to rise in value with the market for assets of that type.

 

back to top

 


Long-Dated Bonds

Bonds with a maturity of more than 15 years from the date of issue.

 

back to top

 


Information contained herein is believed to be reliable, but the accuracy and completeness of this material cannot be guaranteed.

Search

> Advanced Search

Contact Us

For all inquiries please contact us

Follow Us

       
Education and Planning 
AGI-2013-09-26-7795 

Share

Facebook
LinkedIn
Twitter

You are currently leaving us.allianzgi.com and navigating to a third-party website. Allianz Global Investors Distributors LLC accepts no responsibility for content on third-party sites or for the services provided. When using the services provided by a third-party site, you are subject to that site’s terms of service and privacy rules, which you should review carefully.