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Stephen L. Nelson

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Business and Investing Terms – L

lease
A contract that gives an individual or business the right to use a property for an agreed-upon price and time period.
leasehold
The right of occupancy that tenants enjoy as part of a lease.
letter of credit (L/C or LOC)
A document from a bank giving authority for payments to be made to a third party from the bank on behalf of a bank’s customer.
leveraged buyout
When one company takes over another and uses the acquired company’s assets in order to pay back the loans that were taken out in order to take over the company in the first place.
liability
All debts and obligations of a business.
liability insurance
Insurance protecting the policyholder against financial losses resulting from injury done to others.
lien
A charge against real or personal property to secure the repayment of a debt.
life estate
An estate that gives income to a beneficiary until the time of the beneficiary’s death, at which time the estate passes to another party. The beneficiary cannot sell any property belonging to the estate.
limited liability company
Similar to a corporation, a business form that shields investors from risk. Typically, limited liability companies are treated as partnerships for income tax purposes. The owners of a limited liability company are called members.
limited partnership
A partnership in which profits and responsibility for liabilities and debts are shared according to how much of the business each partner owns.
line of credit
A commitment on the part of a bank to lend up to a certain amount of money to a borrower.
liquidity
The ease with which one can turn assets such as property into cash. An asset with “good liquidity” can be sold or converted into cash easily.
living trust
A trust giving one person’s property to another person. Also called an inter vivos trust.
load
The commission that an investor pays to a broker when purchasing mutual funds. In a back-end load, the commission is paid when the investor sells the funds. In a front-end load, it is paid when the investor purchases the funds from the investment house.
load fund
A mutual fund whose purchase price includes a commission. No-load funds do not charge commissions.
loan
Money lent at interest, to be repaid by a specific date.
London Interbank Offered Rate (LIBOR)
The rate at which the biggest banks in London lend money to one another. LIBOR is used as an index by some banks for pegging the interest rate charged to borrowers.

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