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FINANCIAL
GLOSSARY : L
Leverage
Term for gearing
in the U.S., the ratio of a company's debts to its assets.
Leveraged
buyout
Purchase of a company
by an institution using a high proportion of debt. A type of Management
Buy-Out (MBO).
Liabilities
The accounting term
for what a company owes (all cliams against a company).
Limit order
An order of instructions
that an investor gives to his broker, which sets out the limits that
he/she is prepared to pay for investments.
Limited-life
trust
A trust which has
been set up for a limited period, after which it will be wound up.
Liquidation
The process of ending
the existence of a company. A company will go into liquidation if it
is unable to pay its debts. In this situation the company's assets will
be sold in order to pay off its debts.
Liquidity
Liquidity describes
the ease with which an asset can be converted into cash immediately.
A liquid market is one where there are many buyers and seller and it
is easy to sell your investments. For example, the shares on the FTSE
100 index are very liquid while shares on the Alternative Investment
Market are not.
Listed company
A listed company
is one whose shares are included in the Official List of Securities
and are dealt with by members of the Stock Exchange.
Loan stock
Long-term debt issued
by a company in order to raise capital for which interest is paid.
London Interbank
Offer Rate (Libor)
The London Inter-Bank
Offer Rate is the rate of interest which applies to the wholesale money
markets lending between London banks.
London International
Financial Futures and Options Exchange (Liffe)
LIFFE allows investors
and business enterprises to use financial futures to speculate or to
hedge against risks of movements in gilt prices, interest rates, foreign
currency exchange rates, shares prices and bond prices.
Low-start
mortgage
A mortgage that
offers a low interest rate initially which then rises to the lender's
standard variable rate after a set date agreed at the start of the mortgage.
Loan to
value (LTV)
This is the ratio
between the size of the loan you are seeking and the mortgage lenders
valuation of the property.
London Stock
Exchange (LSE)
The London Stock
Exchange is a primary capital market in which companies and other institutions
can raise funds by issuing shares or loan stock. However, it is more
important as a secondary market for buying and selling existing securities.
The Stock Exchange is also the market for dealings in government securities
(gilts).
