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Glossary of Terms

lacp

last adjusted closing price - price has been adjusted for dividends, splits, rights issue and others.

lagging indicators

an economic indicator which tends to follow movements in the economy as a whole- such as those of business spending, the unemployment rate and trade figures- and whose publication confirms things that have already happened rather than pointing to emerging trends. the opposite of leading indicators. also a technical analysis term for mathematical formulas which follow price movements on a chart. they can be used to confirm trends and generate buy and sell signals.

laissez-faire

the opinion that free market forces should be allowed to drive an economic system rather than government intervention.

last trading day

the final day during which trading may take place in a particular futures contract or option contract, after which it must be settled by delivery of the underlying security or cash settlement.

law of supply

an increase in supply leads to a decrease in price, if demand is held constant, while a decrease in supply leads to an increase in price.

leading indicators

economic indicators which are seen to anticipate future trends or expectations, for example regarding money supply and share prices. the opposite of lagging indicators, which are based on retrospective or historical statistics. also, a technical analysis term for mathematical formulas which have the potential to lead changes in price.

leverage

the degree to which a business or individual investor uses borrowed money. also, using an asset, such as property, as security for borrowing to invest in the sharemarket.

leveraged buy-out (lbo)

the complete takeover of, or gaining a controlling interest in, a company using a significant amount of borrowed funds and where the target company’s equity value or potential cash flow is expected to be enough for a profit to be made for shareholders.

liabilities

financial obligations, such as company dividends and pension payments, or debts.

limit order

an order to buy or sell at a fixed price. a person can also place a limit order ‘with discretion’. this enables the broker to buy or sell within a small range of prices.

liquid assets

assets held as cash or which are easily convertible to cash, such as bank bills.

liquid market

a market with a large number of buyers and sellers where trading can be accomplished with ease.

liquidation

the sale of a company’s assets with the intention of winding up its affairs and distributing the remaining cash to shareholders. also, an offsetting trade that closes out any existing security position in the market.

listed company

a company whose shares are accepted for trading on a registered exchange and are able to be bought and sold by members of the general public.

listing rules

the set of rules and conditions imposed by a stock exchange with which companies must comply to remain eligible to be listed companies on that exchange. these conditions might include minimum market capitalization and minimum number of shares outstanding.

london interbank offered rate (libor)

the libor is an indicator rate for international lending. major international banks in london lend cash to each other at this interest rate.

long

a trader who is ‘long’ the market is of the opinion that the price of a security will go up. the opposite of short.

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