sohomghosh/FinRAD_Financial_Readability_Assessment_Dataset

terms stringlengths 1 156	definitions stringlengths 3 4.2k	source stringclasses 15 values	flesch_reading_ease float64 -301.79 121	flesch_kincaid_grade float64 -3.5 55.6	smog_index float64 0 26.5	coleman_liau_index float64 -33.81 51.4	automated_readability_index float64 -6.9 65	dale_chall_readability_score float64 0.1 35.3	linsear_write_formula float64 -0.5 73	gunning_fog float64 0.4 56
ISIN	See INTERNATIONAL SECURITIES IDENTIFICATION NUMBER.	palgrave	-85.89	26.5	0	31.64	25.3	13.36	4.5	26
ISMA	See INTERNATIONAL SECURITIES MARKETS ASSOCIATION.	palgrave	-85.89	26.5	0	29.32	23.5	16.52	4.5	26
ISSUE DATE	The date on a SECURITY which is used in the computation ofACCRUED INTEREST.	palgrave	49.82	9.5	0	9.5	7.9	9.14	8.5	14.43
ISSUE PRICE	The price at which a NEW ISSUE of SECURITIES is offered by a SYNDICATE or UNDERWRITING GROUP to the market. The price is gener- ally established between the underwriters and the ISSUER based on analysis of INDICATIONS OF INTEREST, COMPARABLES, and general market conditions. Also known as OFFER PRICE.	palgrave	38.01	12	14.1	11.66	11	9.6	11.833333	14.68
ISSUER	Any corporate or sovereign entity that floats SECURITIES in theCAPITAL MARKETS.	palgrave	9.55	14.7	0	17.38	13.6	14.23	10.5	22.58
JANUARY EFFECT	An observable condition in the STOCK market that appears to reflect rallies, particularly in SMALL CAP and MID-CAP STOCKS, at the beginning of each year; some of the buying support may come from a reversal of positions that are sold in December to crystallize any TAX losses to offset CAPITAL GAINS.	palgrave	19.71	23.2	0	11.33	27.1	11.12	34.5	25.11
JENSEN INDEX	A common measure of the RISK-adjusted performance of an INVESTMENT PORTFOLIO that compares the average RETURN on the port- folio with the risk of the portfolio, as measured through BETA. The Jensen index, which uses the SECURITY MARKET LINE as a BENCHMARK, can be computed via:JI = E(rP) – (E(rf ) + (E(rm ) – E(rf )) βp)where E(rP) is an estimate of the expected return of the target portfolio, E(rf) is the RISK-FREE RATE, E(rm) is the expected average return of the market port- folio, and βp is the beta of the target portfolio. See also TREYNOR INDEX, SHARPE INDEX.Additional reference: Jensen (1969).	palgrave	29.52	17.3	16.7	10.51	19	10.7	21.666667	17.64
JGB	See JAPANESE GOVERNMENT BOND.	palgrave	33.58	9.6	0	13.05	11.2	11.73	3	11.6
JOBBER	An individual or institution that takes positions in SECURITIES, generally on a very short-term basis, in expectation of generatingprofits. A jobber may or may not also be an authorized MARKET MAKER. See also JOBBING.	palgrave	26.17	12.4	12.5	11.93	9.7	10.23	7.333333	13.93
JOBBING	The practice of continuously buying and selling SECURITIES or other ASSETS in an attempt to make small profits. See alsoJOBBER.	palgrave	25.8	14.6	0	13.46	14	11.73	13	14
JOINT AND SEVERAL	A legal condition where multiple GUARANTORS, BOR- ROWERS, or obligors are liable for the entire amount of an agreed LIABILITY should the other party (or parties) fail to perform. Any party to a joint and several transaction can be sued for nonpayment. See also SEVERAL BUT NOT JOINT.	palgrave	55.24	9.5	12.5	9.97	9.7	10.02	10.666667	11.4
JOINT BOND	A BOND where payment of INTEREST and/or PRINCIPAL is the legal responsibility of more than one party, such as an issuing SUBSIDIARY and its parent company.than individually. Such organizations were popular during the seventeenth J century but are now relatively uncommon. See also CORPORATION, PUBLIC LIMITED COMPANY.	palgrave	21.7	14.1	15.9	15.02	13.6	10.13	12.833333	17.34
JOURNAL ENTRY	The recording of financial data related to a particular transaction. In a DOUBLE ENTRY ACCOUNTING system the journal entry involves both a DEBIT and a CREDIT.	palgrave	41.36	10.7	0	11.06	9.2	12.18	8	12.89
JUMBO PFANDBRIEFE	Any PFANDBRIEFE issue that has a minimum size of EUR1 billion, designed to ensure there is enough volume to promote liquidSECONDARY TRADING.	palgrave	49.15	11.9	0	13.58	15.1	12.62	13	12.44
JUMP PROCESS	A mathematical process used to describe the movement of ASSET prices that are impacted by sudden, discontinuous moves, such as those generated by EVENT RISKS. Certain OPTION pricing models utilize a jump process, rather than a continuous STOCHASTIC PROCESS, to estimate values. See also JUMP-TO-DEFAULT.	palgrave	47.79	10.3	12.5	14.38	13.2	11.4	10.166667	12.22
JUMP-TO-DEFAULT	A JUMP PROCESS that is used in the CREDIT markets to reflect the fact that a company may DEFAULT on its DEBT instantaneously, causing a sharp and rapid downward jump in the price of its LIABILITIES to default-based levels.	palgrave	40.35	17.3	0	10.22	20.3	10.83	23.5	17.65
JUNIOR DEBT	See SUBORDINATED DEBT.	palgrave	9.21	12.7	0	11.15	11.5	14.31	1.5	14.53
JUNIOR SUBORDINATED DEBT	The lowest ranking form of JUNIOR DEBT. Junior subordinated claims receive payment after junior INVESTORS or CREDITORS, but before EQUITY investors.	palgrave	35.44	10.9	0	15.75	12.6	10.17	5.75	9.91
JUNK BOND	See HIGH-YIELD BOND.	palgrave	93.81	0.9	0	5.35	8.3	14.31	0.5	1.2
JV	See JOINT VENTURE.	palgrave	93.81	0.9	0	3.43	5.2	14.31	0.5	1.2
KABUSHIKI KAISHI (KK)	In Japan, a PUBLIC COMPANY.	palgrave	66.4	5.2	0	2.64	2.7	7.04	2.5	2
KAFFIRS	The COMMON STOCK of South African gold mining com-panies listed and traded in the UK stock market on a direct basis, and in the USmarket via AMERICAN DEPOSITORY RECEIPTS and AMERICAN DEPOSITORYSHARES. See also KANGAROOS.	palgrave	36.79	12.5	0	12.58	12.3	11.27	12.25	11.57
KANGAROOS	The COMMON STOCK of Australian companies listedand traded on the LONDON STOCK EXCHANGE. See also KAFFIRS.	palgrave	63.36	6.4	0	12.25	9.1	10.94	3.5	5.7
KAPPA	See VEGA.	palgrave	77.91	2.9	0	-10.31	-1.7	11.63	0	0.8
KEEPWELL AGREEMENT	A CONTRACT or GUARANTEE between a PARENTcompany or HOLDING COMPANY and its AFFILIATE or SUBSIDIARY agreeingto maintain a certain level of ownership and/or financial SOLVENCY for astated period of time.	palgrave	7.19	19.7	0	16.2	20.6	11.97	25	24
KEIDANREN	The Japan Business Federation, created in 2002 fromthe merger of the Japan Federation of Economic Organizations and the JapanFederation of Employers’ Associations, which acts as a representative forcompanies, industrial associations, and regional economic organizations onimportant business-related matters. Also known as NIPPON KEIDANREN.	palgrave	-25.99	22.1	0	22.91	22.5	12.2	19.5	21.73
KEIRETSU	A Japanese business conglomerate, generally comprised ofaseries of companies with cross-SHAREHOLDINGS and business relationships but no central core company. A main BANK generally serves as a provider of funding and de-facto corporate monitor. The keiretsu replaced the centralized ZAIBATSU conglomerate that existed until the mid-1940s. See also CHAEBOL.	palgrave	33.92	11.5	14.2	18.08	14.8	12.78	8.75	13.97
KEOGH PLAN	In the United States, a TAX-deferred PENSION account that can be established by self-employed individuals or small, unincorporated busi- nesses. Funds in the account are taxable upon withdrawal, but generally occur when the BENEFICIAL OWNER is retired, and thus in a lower tax bracket. See also INDIVIDUAL RETIREMENT ACCOUNT.	palgrave	29.55	13.2	13	14.03	13.3	10.89	11.166667	13.05
KEY MAN RISK	The RISK arising from the departure of a person or team that is critically responsible for a vital management or business function within a company. Excessive reliance on such an individual(s) can lead to loss of REVENUES and/or an increase in PROCESS RISK.	palgrave	41.19	12.9	0	11.02	12.9	10.58	14.25	14.18
KEYNESIAN ECONOMICS	A theory of MACROECONOMICS developed by economist John Keynes in the twentieth century that supports the notion of government intervention in economic progress (via FISCAL POLICY and MONETARY POLICY) in order to overcome any suboptimal decisions taken by the private sector. See also CLASSICAL ECONOMICS, KEYNESIAN FORMULA.Additional reference: Keynes (1936).	palgrave	12.26	17.8	0	17.93	20.3	14.03	22	24.4
KEYNESIAN FORMULA	A general MACROECONOMIC equation developed by economist John Keynes, which is given as:where Y is GROSS DOMESTIC PRODUCT (or AGGREGATE DEMAND), C is consumption (or personal income less TAXES less amount not saved), I is INVESTMENT, G is government spending, X is EXPORTS, M is IMPORTS.	palgrave	16.33	22.4	0	12.49	26.3	14.16	33	25.36
KICK-IN OPTION	See REVERSE KNOCK-IN OPTION.	palgrave	75.88	3.7	0	10.15	10	11.73	1	1.6
KICK-OUT OPTION	See REVERSE KNOCK-OUT OPTION.	palgrave	50.5	7.2	0	11.6	11.2	11.73	1	1.6
KICKER	An EQUITY stake offered by a company to a BANK provid- ing LOAN funding or an INVESTOR supplying CAPITAL through a NOTE or BOND. Although the compensation can take different forms, in practice it is often provided in the form of a WARRANT, generating gains if the company’s STOCK price rises. Also known as EQUITY , SWEETENER. See alsoCARROT EQUITY.	palgrave	47.99	10.2	13.4	9.85	9.1	9.99	10.75	11.34
KILLER BEES	Investment bankers hired by a company to help defend against a HOSTILE TAKEOVER.	palgrave	66.74	7.2	0	11.7	9.7	10.35	7.5	8.28
KINKED YIELD CURVE	A TERM STRUCTURE where short-term INTEREST RATES and long-term interest rates are approximately equal, but medium-term rates are higher. See also FLAT YIELD CURVE, NEGATIVE YIELD CURVE, POSITIVE YIELD CURVE, YIELD CURVE.	palgrave	63.7	8.4	0	15.08	14.4	8.87	10.5	11.4
KITING	See CHECK .	palgrave	77.91	2.9	0	-7.41	0.8	0.1	0.5	0.8
KIWI	(1) A BOND, NOTE, or CERTIFICATE OF DEPOSIT issued in New Zealand dollars in the New Zealand markets by a foreign company or BANK.(2) The New Zealand dollar.KKSee KABUSHIKI KAISHI.	palgrave	49.49	13.8	0	10.75	17.3	11.44	17	13.33
KNOCK-IN OPTION	A COMPLEX OPTION that leads to the creation of a EUROPEAN OPTION if the price of the UNDERLYING market reference moves above or below a predefined BARRIER level. See also BARRIER OPTION, DOWN AND IN OPTION, UP AND IN OPTION.	palgrave	51.18	11.1	0	8.99	10.4	8.58	13	13
KNOCK-OUT OPTION	A COMPLEX OPTION that extinguishes a EUROPEAN OPTION if the price of the UNDERLYING reference moves above/below a pre- defined BARRIER level. See also BARRIER OPTION, DOWN AND OUT OPTION, UP AND OUT OPTION.	palgrave	45.76	11.1	0	10.9	11	9.12	12	12.68
KONDRATIEFF WAVE	An observation put forth by Russian economist Nikolai Kondratieff that BUSINESS CYCLES are of a long-term nature, span- ning 50 years or more, during which time they alternate between periods of growth and contraction. Also known as SUPERCYCLE.	palgrave	52.19	10.7	0	13.4	13.7	11.23	13	14.97
KRUGERRAND	A coin minted by the South African government which con- tains 1 troy ounce of GOLD, commonly purchased by INVESTORS seeking physical gold.1where N is the number of observations, xi is an observation, μ is the mean, σ is the STANDARD DEVIATION.See also EXCESS KURTOSIS, LOGNORMAL DISTRIBUTION, NORMAL DISTRI-BUTION, SKEWNESS	palgrave	12.27	24	0	14.23	29.5	15.27	35	26.4
L	A broad measure of liquid money supply, generally defined as M3 plusGOVERNMENT BILLS, COMMERCIAL PAPER, BANKER’S ACCEPTANCES, and EUROCURRENCY DEPOSITS of residents.	palgrave	15.31	16.6	0	19.38	20.4	14.06	17	19.71
LABOR CODETERMINATION	A legal rule, found primarily in Continental European nations, requiring a certain number of labor representatives to be elected to a company’s BOARD OF DIRECTORS in order to give employees proper input into corporate affairs.	palgrave	10.57	20.5	0	14.63	21.9	12.14	26.5	24.29
LADDERED PORTFOLIO	An INVESTMENT PORTFOLIO comprised of NOTES and BONDS with short-, medium- and long-term MATURITIES, generally in approximately equal amounts. Such a portfolio provides the INVESTOR with exposure to the entire YIELD CURVE, generating INTEREST and PRINCIPAL redemptions on a steady basis over time. See also BARBELL PORTFOLIO.	palgrave	38.62	11.8	14.6	15.6	14.2	11.81	11.833333	14.79
LADDERING	An illegal practice where the UNDERWRITER of a NEW ISSUE of COMMON STOCK allocates SHARES to an INVESTOR if the investor agrees to purchase additional shares in the SECONDARY MARKET (which will help support the price and generate additional COMMISSIONS). See alsoSPINNING.	palgrave	20.39	20.8	0	14.93	25.5	11.73	29	23.47
LAG	The time period between the occurrence of a loss, or filing of a CLAIM by the INSURED, and the receipt of a SETTLEMENT from the INSURER.	palgrave	53.55	12.3	0	7.09	11.7	9.18	17	15.02
LAMBDA	See VEGA.	palgrave	77.91	2.9	0	-10.31	-1.7	11.63	0	0.8
LAND BANK	A specialized banking institution dedicated to financing of agricultural development, often with a long-term horizon. Also known asAGRICULTURAL BANK.	palgrave	11.07	14.1	0	19.69	15.8	11.59	7.25	18.54
LAPSE RATIO	In INSURANCE, a measure indicating the degree to which new policies are written and existing policies are renewed, generally computedby comparing the percentage of policies in force at the start of the year versusthose outstanding at the end of the year. A rising lapse ratio means policies arerolling off faster than new policies are being written and existing policies arebeing renewed.	palgrave	40.52	15.2	0	14.11	19.2	9.81	20.25	18.1
LAPSED OPTION	An IN-THE-MONEY OPTION that has expired and which hasnot been EXERCISED, resulting in an economic loss for the holder of the option.	palgrave	57.61	10.7	0	10.91	13.4	9.03	14	14.25
LARGE CAP STOCK	The COMMON STOCK of a company with a largeMARKET CAPITALIZATION, generally in excess of $5 billion. See alsoMICROSTOCK, MID-CAP STOCK.	palgrave	27.49	11.9	0	12.85	10.7	11.24	6.5	12
LARGE-DEDUCTIBLE POLICY	A LOSS-SENSITIVE INSURANCE CONT-RACT that features a DEDUCTIBLE that is much larger than one foundon a standard fixed PREMIUM, full INSURANCE contract. The INSUREDretains a much larger amount of RISK and pays the INSURER a smallerPREMIUM.	palgrave	53.21	10.3	0	14.32	14.1	11.99	12.5	13.87
LARGE LINE CAPACITY	The ability for an INSURER or REINSURER toUNDERWRITE a large RISK exposure under a single policy. Insurers and rein-surers with strong financial standing and significant CAPITAL resources aregenerally able to offer a greater amount of large line capacity without seekingREINSURANCE and RETROCESSION.	palgrave	16.32	16.2	0	17.93	18	11.82	17.5	19.83
LARGE LOSS PRINCIPLE	In INSURANCE, the concept of transferring highseverity/low frequency losses to an INSURER. Assuming fair PREMIUM pri-cing, the principle is often considered to be a prudent and cost-effective formof corporate RISK MANAGEMENT, as catastrophic loss events are very difficultto predict and quantify and can create significant FINANCIAL DISTRESS in theabsence of proper LOSS FINANCING.	palgrave	10.74	18.3	0	18.16	21.1	13.89	22.75	24.94
LASPEYRES’ INDEX	See BASE WEIGHTED INDEX.	palgrave	75.88	3.7	0	5.8	5.3	11.73	1	1.6
LAST IN FIRST OUT (LIFO)	An INVENTORY management and ACCOUN-TING approach where the last raw materials or work-in-progress inventoryacquired for production of final goods are used first. Costs and inventoryvaluation are thus based on the latest, and then earliest, items in inventory,regardless of whether this corresponds to the actual physical movement inthe inventory. See also FIRST IN FIRST OUT (FIFO).	palgrave	27.52	14	15.5	16.13	15.8	11.72	13.833333	15.32
LAST SALE	See LAST TRADE.	palgrave	119.19	-2.7	0	-2.38	0.5	0.15	0.5	1.2
LAST TRADE	The latest TRADE in a particular ASSET or SECURITY, whichyields the most current price at which identical positions can be valued. Alsoknown as LAST SALE.	palgrave	58.79	8.2	0	11.3	9.3	10.57	7.75	13
LAST TRADING DAY	The final day on which TRADING in a specificEXCHANGE-TRADED DERIVATIVE CONTRACT can occur.	palgrave	41.36	10.7	0	15.76	13.3	12.78	7.5	11.35
LATE TRADING	An illegal practice where clients enter MUTUAL FUND pur-chase ORDERS after the official market close in order to take advantage of latemarket-moving events.	palgrave	31.21	14.6	0	16.08	17.5	12.33	16.5	16.16
LATENT LIQUIDITY	Blocks of STOCK held by INSTITUTIONAL INVESTORS in their PORTFOLIOS that may be available for sale, but which are not activelyadvertised or marketed. Latent liquidity may be brought to market through the efforts of BROKERS, who communicate with investors and ascertain their will- ingness to sell portions of their positions.	palgrave	46.1	13	0	14.45	17.1	9.93	17	17.2
LAUNDERING	See MONEY .	palgrave	35.61	8.8	0	-7.41	0.8	0.1	0.5	0.8
LAYERING	The second stage in the MONEY LAUNDERING process, in which cash deposited during the PLACEMENT phase is used in a series of complex financial transactions in order to separate illicit funds from their real source and obscure any AUDIT trail. Layering can include wiring cash to other insti- tutions, purchasing BONDS, STOCKS, or other INVESTMENTS, or funding shell companies.	palgrave	41.53	14.8	0	13.7	18.6	12.06	19.75	17.9
LDC	See LESSER DEVELOPED COUNTRY.	palgrave	33.58	9.6	0	13.05	11.2	11.73	2	11.6
LEAD	The first UNDERWRITER or SYNDICATE on an INSURANCE POLICY underwritten via LLOYD’S OF LONDON, and the party responsible for estab- lishing the PREMIUM, issuing the policy, and collecting premiums.	palgrave	8.2	19.3	0	15.91	20.3	13.24	25.5	25.39
LEAD INDEPENDENT DIRECTOR	A DIRECTOR that serves as leader of the other independent members of the BOARD OF DIRECTORS. The role can be found in a SINGLE BOARD SYSTEM when the roles of the chairman and CHIEFEXECUTIVE OFFICER are combined, and is intended to reinforce external scrutiny of management affairs. Also known as PRESIDING DIRECTOR. See also EXECUTIVE DIRECTOR, NONEXECUTIVE DIRECTOR.	palgrave	39.84	11.3	14.6	12.52	11	9.8	11.25	14.08
LEAGUE TABLE	A tabulation of deals underwritten or advisories completed by financial intermediaries on behalf of companies and sovereigns.	palgrave	3.46	17	0	19.25	17.3	13.77	16.5	25.62
LEASE PURCHASE AGREEMENT	A form of LEASE where payments made by the LESSEE are allocated to the eventual purchase of the ASSET.	palgrave	69.11	8.3	0	8.07	8.9	10.4	11.5	11.81
LEASEBACK	See SALE AND .	palgrave	93.81	0.9	0	-6.26	-2.7	0.15	1	1.2
LEG	One component of a multicomponent financial transaction, often associated with structured DERIVATIVES, STRUCTURED NOTES, and other complex dealings.	palgrave	-6.02	18.6	0	23.37	21.9	13.3	15	20.53
LEGAL MECHANISM CONTROL	A structure or process where effective con- trol of a company is obtained through legal or structural mechanisms (e.g., a pyramid holding company) rather than the purchase of a majority share of COMMON STOCK. See also MAJORITY CONTROL, MANAGEMENT CONTROL, MINORITY CONTROL, TOTAL CONTROL, VOTING TRUST CONTROL.	palgrave	39.16	13.6	0	14.1	16.8	11.86	15.75	13.66
LEGAL OWNER	A person or institution that holds legal TITLE to an ASSET or INVESTMENT and can arrange for its sale or transfer, but who may not be entitled to right of use (i.e., it may lack a BENEFICIAL INTEREST). See alsoBENEFICIAL OWNER.	palgrave	50.67	11.3	0	8.07	10.3	9.27	13.25	14.05
LEGAL RESERVES	(1) RESERVES held by BANKS in support of demand and time DEPOSIT balances, generally necessary in order to comply with RESERVE REQUIREMENTS imposed by a governing CENTRAL BANK or monetary authority. (2) Reserves established by a company to cover possible legal contin- gencies or lawsuits.	palgrave	8.88	23.2	0	14.17	26.7	13.59	31.5	24.22
LEGAL RISK	The RISK of loss arising from failures in the legal process, including unenforceability of CONTRACTS or lack of appropriate documen- tation related to business arrangements such as GUARANTEES, MASTER AGREEMENTS, or LOAN agreements.	palgrave	21.06	18.5	0	17.42	23.5	12.93	23.5	21.68
LEGAL TENDER	MONEY that must be accepted in the settlement of amounts due.	palgrave	68.77	6.4	0	7.93	5.9	7.05	6.5	8.04
LEGGING	(1) Establishing or unwinding one of two segments of a STRADDLE, or STRANGLE, or INDEX ARBITRAGE program, or other complex TRADE, thus creating an exposure to the direction of the SECURITY or mar- ket until the accompanying position is added or the second LEG is unwound.(2) The process of slowly accumulating a position in a security.	palgrave	-2.29	27.5	0	11.45	30.1	12.9	40	28.83
LENDER	An individual or institution that provides funds to a BORROWER, either informally or formally, and with or without COLLATERAL. In exchange for providing funds, the lender generally expects recompense, which is levied via periodic INTEREST payments. See also CREDITOR.	palgrave	24.44	13.1	14.6	14.83	12.7	11.97	10.5	17.51
LENDING	The act of granting a LOAN to a customer. Lending is typically undertaken by BANKS and nonbank FINANCIAL INSTITUTIONS, and gener- ates CREDIT RISK.	palgrave	50.84	9.2	0	10.83	8.9	12.13	7	11.47
LENDING LIMIT	See LEGAL .	palgrave	35.61	8.8	0	-7.41	0.8	11.63	0.5	0.8
LEPO	See LOW EXERCISE PRICE OPTION.	palgrave	66.4	5.2	0	7.28	5.6	10.2	2.5	10
LESSEE	A party in a LEASE transaction that contracts to lease an ASSET from another party, paying periodic payments in exchange for use of the asset dur- ing a stated period. See also LESSOR.	palgrave	54.73	9.7	0	8.41	8.5	10.2	10.25	10.24
LESSER DEVELOPED COUNTRY (LDC)	A country that features an economy that is gradually developing and strengthening, but lacks a sufficiently robustindustrial production base to contribute in a meaningful way to national income and EXPORTS. LDCs may impose certain TRADE barriers and/or EXCHANGE CONTROLS in order to protect their economies from excessive IMPORTS or speculative inflows. As a result of nascent market conduits and often weak financial standing, LDCs are typically characterized by a high degree of SOVEREIGN RISK.	palgrave	21.02	16.5	16.7	15.73	17.8	11.69	18	19.07
LESSOR	A party in a LEASE transaction that leases an ASSET to another party, receiving periodic payments in exchange for providing use of the asset during a stated period. See also LESSEE.	palgrave	47.28	10.5	0	10.09	9.3	10.01	10.75	12.65
LETTER OF COMFORT	See COMFORT LETTER.	palgrave	59.97	5.6	0	5.35	6.8	0.15	0.5	1.2
LETTRES DE GAGE	In Luxembourg, a form of COVERED BOND backed by a BANK’s MORTGAGES. See also CEDULAS HIPOTECARIAS, HYPOTHEKENPFANDBRIEFE, IRISH ASSET COVERED SECURITIES, JUMBO PFANDBRIEFE, OBLIGATIONS FONCIERES, OFFENTLICHE PFANDBRIEFE.	palgrave	49.31	9.7	0	22.09	19.2	14.25	7.75	11.33
LEVEL PREMIUM	In INSURANCE, a PREMIUM that remains unchanged over time, even if the amount of RISK the INSURER assumes from the INSURED increases.	palgrave	57.61	10.7	0	11.2	13.4	11.19	15	16.07
LEVERAGE	The degree to which a company uses on- and OFF-BALANCE SHEET DEBT to fund its operations. Use of leverage magnifies the poten- tial RETURNS and RISKS of an INVESTMENT or corporate strategy. In gen- eral, the greater the amount of leverage, the riskier the financial standing of the company and the greater the expectation of higher returns by suppli- ers of CAPITAL. Also known as FINANCIAL , GEARING. See alsoDEBT SERVICE, INTEREST COVERAGE, LEVERAGE RATIOS, MODIGLIANI- MILLER THEORY, OPM, OPERATING LEVERAGE.Additional reference: Miller and Modigliani (1958).	palgrave	45.76	11.1	14	13.4	13.5	11.54	12.2	12.92
LEVERAGE ARBITRAGE	An ARBITRAGE scheme intended to take advan- tage of a misperception that creates a gap between a company’s CREDIT RATING and its actual financial activities/condition. This generally occurs when a highly rated company uses its strong rating to borrow a significant amount of DEBT at favorable rates and then invest in a range of speculativeASSETS.	palgrave	26.64	16.4	0	13.47	17.4	12.75	19.75	19.73
LEVERAGE EFFECT	The degree to which the use of DEBT on a company’s BALANCE SHEET impacts its EARNINGS PER SHARE and its DIVIDENDPAYOUT. Greater use of leverage magnifies earnings and losses, and its effects can be estimated via:⎝where EPS is EARNINGS PER SHARE, EBIT is EARNINGS BEFORE INTEREST AND TAXES, Δ is the change in the respective variable.	palgrave	51.52	13	0	11.2	15.9	11.23	17	15.49
LEVERAGE RATIOS	Measures that reflect the degree to which a company uses DEBT in its operations. Common ratios include DEBT TO EQUITY, DEBT TO ASSETS, and CONTINGENTS TO ASSETS.	palgrave	49.31	9.7	0	10.26	8.9	11.32	7.75	9.84
LEVERAGED UNIT TRUST	A UNIT TRUST that is permitted to use LEVERAGE, either through the issuance of DEBT or the use of DERIVATIVES, in order to enhance INVESTOR RETURNS. The RISK profile of the leveraged unit trust is greater than a standard unit trust, with the potential of producing greater returns and greater losses. See also LEVERAGED EXCHANGE-TRADED FUND.	palgrave	60.95	9.4	10.5	11.6	12	9.92	11	10.34
LGD	See LOSS-GIVEN DEFAULT.	palgrave	34.59	9.2	0	11.15	13	9.05	1.5	1.2
LIABILITY	A legal OBLIGATION to make a payment or repay a DEBT; a liabil- ity is often used to fund the purchase of a productive ASSET. Common liabil- ities include ACCOUNTS PAYABLE, COMMERCIAL PAPER, DEPOSITS, LOANS, NOTES, BONDS, and certain deferred TAXES and charges and OFF-BALANCE SHEET items. An increase in liabilities results in a CREDIT, while a decrease leads to a DEBIT.	palgrave	50.46	11.4	11.9	10.5	12.5	12.56	12.666667	11.51
LIABILITY INSURANCE	An INSURANCE CONTRACT providing an INSURED with coverage for losses sustained from payments it makes related to bodily injury or property damage. Coverage can be created for both per- sonal and business exposures, including comprehensive personal liabil- ity, COMMERCIAL GENERAL LIABILITY, employers liability, and workers compensation.	palgrave	-2.64	19.3	0	18.69	19.9	14.05	21	23.11
LIABILITY MANAGEMENT	The general practice of using a mix of funding instruments and markets, and INTEREST RATE and FOREIGN EXCHANGE HEDGES, in order to manage the LIQUIDITY RISK and MARKET RISK inherent in the corporate BALANCE SHEET.	palgrave	27.49	18.1	0	12.49	20.1	11.69	23.5	19.71
LIABILITY SWAP	An OVER-THE-COUNTER INTEREST RATE SWAP or CURRENCY SWAP that exchanges COUPONS or CURRENCIES from an under- lying LIABILITY in order to create a synthetic liability that meets a company’s preferred profile. See also ASSET SWAP.	palgrave	36.79	12.5	0	13.57	13.3	10.82	12.75	13.86
LIAR LOAN	A residential MORTGAGE that is granted by a BORROWER to a LENDER on the basis of little or no documentation proving INCOME and NET WORTH, and which is therefore subject to falsification. Liar loans have historically been part of the SUBPRIME MORTGAGE and ALT-A mortgage sec- tor. See also NINJA LOAN.	palgrave	54.22	9.9	10.5	10.15	10.1	10.05	10.166667	10.72
LICENSED CARRIER	See ADMITTED INSURER.	palgrave	9.21	12.7	0	9.23	9.9	14.31	2.5	27.87
LIEN	See SECURED INTEREST.	palgrave	34.59	9.2	0	9.23	9.9	14.31	1.5	14.53

ISIN

See INTERNATIONAL SECURITIES IDENTIFICATION NUMBER.

palgrave

0

-85.89

26.5

0

31.64

25.3

13.36

4.5

26

ISMA

See INTERNATIONAL SECURITIES MARKETS ASSOCIATION.

palgrave

0

-85.89

26.5

0

29.32

23.5

16.52

4.5

26

ISSUE DATE

The date on a SECURITY which is used in the computation ofACCRUED INTEREST.

palgrave

0

49.82

9.5

0

9.5

7.9

9.14

8.5

14.43

ISSUE PRICE

The price at which a NEW ISSUE of SECURITIES is offered by a SYNDICATE or UNDERWRITING GROUP to the market. The price is gener- ally established between the underwriters and the ISSUER based on analysis of INDICATIONS OF INTEREST, COMPARABLES, and general market conditions. Also known as OFFER PRICE.

palgrave

0

38.01

12

14.1

11.66

11

9.6

11.833333

14.68

ISSUER

Any corporate or sovereign entity that floats SECURITIES in theCAPITAL MARKETS.

palgrave

0

9.55

14.7

0

17.38

13.6

14.23

10.5

22.58

JANUARY EFFECT

An observable condition in the STOCK market that appears to reflect rallies, particularly in SMALL CAP and MID-CAP STOCKS, at the beginning of each year; some of the buying support may come from a reversal of positions that are sold in December to crystallize any TAX losses to offset CAPITAL GAINS.

palgrave

0

19.71

23.2

0

11.33

27.1

11.12

34.5

25.11

JENSEN INDEX

A common measure of the RISK-adjusted performance of an INVESTMENT PORTFOLIO that compares the average RETURN on the port- folio with the risk of the portfolio, as measured through BETA. The Jensen index, which uses the SECURITY MARKET LINE as a BENCHMARK, can be computed via:JI = E(rP) – (E(rf ) + (E(rm ) – E(rf )) βp)where E(rP) is an estimate of the expected return of the target portfolio, E(rf) is the RISK-FREE RATE, E(rm) is the expected average return of the market port- folio, and βp is the beta of the target portfolio. See also TREYNOR INDEX, SHARPE INDEX.Additional reference: Jensen (1969).

palgrave

0

29.52

17.3

16.7

10.51

19

10.7

21.666667

17.64

JGB

See JAPANESE GOVERNMENT BOND.

palgrave

0

33.58

9.6

0

13.05

11.2

11.73

3

11.6

JOBBER

An individual or institution that takes positions in SECURITIES, generally on a very short-term basis, in expectation of generatingprofits. A jobber may or may not also be an authorized MARKET MAKER. See also JOBBING.

palgrave

0

26.17

12.4

12.5

11.93

9.7

10.23

7.333333

13.93

JOBBING

The practice of continuously buying and selling SECURITIES or other ASSETS in an attempt to make small profits. See alsoJOBBER.

palgrave

0

25.8

14.6

0

13.46

14

11.73

13

14

JOINT AND SEVERAL

A legal condition where multiple GUARANTORS, BOR- ROWERS, or obligors are liable for the entire amount of an agreed LIABILITY should the other party (or parties) fail to perform. Any party to a joint and several transaction can be sued for nonpayment. See also SEVERAL BUT NOT JOINT.

palgrave

0

55.24

9.5

12.5

9.97

9.7

10.02

10.666667

11.4

JOINT BOND

A BOND where payment of INTEREST and/or PRINCIPAL is the legal responsibility of more than one party, such as an issuing SUBSIDIARY and its parent company.than individually. Such organizations were popular during the seventeenth J century but are now relatively uncommon. See also CORPORATION, PUBLIC LIMITED COMPANY.

palgrave

0

21.7

14.1

15.9

15.02

13.6

10.13

12.833333

17.34

JOURNAL ENTRY

The recording of financial data related to a particular transaction. In a DOUBLE ENTRY ACCOUNTING system the journal entry involves both a DEBIT and a CREDIT.

palgrave

0

41.36

10.7

0

11.06

9.2

12.18

8

12.89

JUMBO PFANDBRIEFE

Any PFANDBRIEFE issue that has a minimum size of EUR1 billion, designed to ensure there is enough volume to promote liquidSECONDARY TRADING.

palgrave

0

49.15

11.9

0

13.58

15.1

12.62

13

12.44

JUMP PROCESS

A mathematical process used to describe the movement of ASSET prices that are impacted by sudden, discontinuous moves, such as those generated by EVENT RISKS. Certain OPTION pricing models utilize a jump process, rather than a continuous STOCHASTIC PROCESS, to estimate values. See also JUMP-TO-DEFAULT.

palgrave

0

47.79

10.3

12.5

14.38

13.2

11.4

10.166667

12.22

JUMP-TO-DEFAULT

A JUMP PROCESS that is used in the CREDIT markets to reflect the fact that a company may DEFAULT on its DEBT instantaneously, causing a sharp and rapid downward jump in the price of its LIABILITIES to default-based levels.

palgrave

0

40.35

17.3

0

10.22

20.3

10.83

23.5

17.65

JUNIOR DEBT

See SUBORDINATED DEBT.

palgrave

0

9.21

12.7

0

11.15

11.5

14.31

1.5

14.53

JUNIOR SUBORDINATED DEBT

The lowest ranking form of JUNIOR DEBT. Junior subordinated claims receive payment after junior INVESTORS or CREDITORS, but before EQUITY investors.

palgrave

0

35.44

10.9

0

15.75

12.6

10.17

5.75

9.91

JUNK BOND

See HIGH-YIELD BOND.

palgrave

0

93.81

0.9

0

5.35

8.3

14.31

0.5

1.2

JV

See JOINT VENTURE.

palgrave

0

93.81

0.9

0

3.43

5.2

14.31

0.5

1.2

KABUSHIKI KAISHI (KK)

In Japan, a PUBLIC COMPANY.

palgrave

0

66.4

5.2

0

2.64

2.7

7.04

2.5

2

KAFFIRS

The COMMON STOCK of South African gold mining com-panies listed and traded in the UK stock market on a direct basis, and in the USmarket via AMERICAN DEPOSITORY RECEIPTS and AMERICAN DEPOSITORYSHARES. See also KANGAROOS.

palgrave

0

36.79

12.5

0

12.58

12.3

11.27

12.25

11.57

KANGAROOS

The COMMON STOCK of Australian companies listedand traded on the LONDON STOCK EXCHANGE. See also KAFFIRS.

palgrave

0

63.36

6.4

0

12.25

9.1

10.94

3.5

5.7

KAPPA

See VEGA.

palgrave

0

77.91

2.9

0

-10.31

-1.7

11.63

0

0.8

KEEPWELL AGREEMENT

A CONTRACT or GUARANTEE between a PARENTcompany or HOLDING COMPANY and its AFFILIATE or SUBSIDIARY agreeingto maintain a certain level of ownership and/or financial SOLVENCY for astated period of time.

palgrave

0

7.19

19.7

0

16.2

20.6

11.97

25

24

KEIDANREN

The Japan Business Federation, created in 2002 fromthe merger of the Japan Federation of Economic Organizations and the JapanFederation of Employers’ Associations, which acts as a representative forcompanies, industrial associations, and regional economic organizations onimportant business-related matters. Also known as NIPPON KEIDANREN.

palgrave

0

-25.99

22.1

0

22.91

22.5

12.2

19.5

21.73

KEIRETSU

A Japanese business conglomerate, generally comprised ofaseries of companies with cross-SHAREHOLDINGS and business relationships but no central core company. A main BANK generally serves as a provider of funding and de-facto corporate monitor. The keiretsu replaced the centralized ZAIBATSU conglomerate that existed until the mid-1940s. See also CHAEBOL.

palgrave

0

33.92

11.5

14.2

18.08

14.8

12.78

8.75

13.97

KEOGH PLAN

In the United States, a TAX-deferred PENSION account that can be established by self-employed individuals or small, unincorporated busi- nesses. Funds in the account are taxable upon withdrawal, but generally occur when the BENEFICIAL OWNER is retired, and thus in a lower tax bracket. See also INDIVIDUAL RETIREMENT ACCOUNT.

palgrave

0

29.55

13.2

13

14.03

13.3

10.89

11.166667

13.05

KEY MAN RISK

The RISK arising from the departure of a person or team that is critically responsible for a vital management or business function within a company. Excessive reliance on such an individual(s) can lead to loss of REVENUES and/or an increase in PROCESS RISK.

palgrave

0

41.19

12.9

0

11.02

12.9

10.58

14.25

14.18

KEYNESIAN ECONOMICS

A theory of MACROECONOMICS developed by economist John Keynes in the twentieth century that supports the notion of government intervention in economic progress (via FISCAL POLICY and MONETARY POLICY) in order to overcome any suboptimal decisions taken by the private sector. See also CLASSICAL ECONOMICS, KEYNESIAN FORMULA.Additional reference: Keynes (1936).

palgrave

0

12.26

17.8

0

17.93

20.3

14.03

22

24.4

KEYNESIAN FORMULA

A general MACROECONOMIC equation developed by economist John Keynes, which is given as:where Y is GROSS DOMESTIC PRODUCT (or AGGREGATE DEMAND), C is consumption (or personal income less TAXES less amount not saved), I is INVESTMENT, G is government spending, X is EXPORTS, M is IMPORTS.

palgrave

0

16.33

22.4

0

12.49

26.3

14.16

33

25.36

KICK-IN OPTION

See REVERSE KNOCK-IN OPTION.

palgrave

0

75.88

3.7

0

10.15

10

11.73

1

1.6

KICK-OUT OPTION

See REVERSE KNOCK-OUT OPTION.

palgrave

0

50.5

7.2

0

11.6

11.2

11.73

1

1.6

KICKER

An EQUITY stake offered by a company to a BANK provid- ing LOAN funding or an INVESTOR supplying CAPITAL through a NOTE or BOND. Although the compensation can take different forms, in practice it is often provided in the form of a WARRANT, generating gains if the company’s STOCK price rises. Also known as EQUITY , SWEETENER. See alsoCARROT EQUITY.

palgrave

0

47.99

10.2

13.4

9.85

9.1

9.99

10.75

11.34

KILLER BEES

Investment bankers hired by a company to help defend against a HOSTILE TAKEOVER.

palgrave

0

66.74

7.2

0

11.7

9.7

10.35

7.5

8.28

KINKED YIELD CURVE

A TERM STRUCTURE where short-term INTEREST RATES and long-term interest rates are approximately equal, but medium-term rates are higher. See also FLAT YIELD CURVE, NEGATIVE YIELD CURVE, POSITIVE YIELD CURVE, YIELD CURVE.

palgrave

0

63.7

8.4

0

15.08

14.4

8.87

10.5

11.4

KITING

See CHECK .

palgrave

0

77.91

2.9

0

-7.41

0.8

0.1

0.5

0.8

KIWI

(1) A BOND, NOTE, or CERTIFICATE OF DEPOSIT issued in New Zealand dollars in the New Zealand markets by a foreign company or BANK.(2) The New Zealand dollar.KKSee KABUSHIKI KAISHI.

palgrave

0

49.49

13.8

0

10.75

17.3

11.44

17

13.33

KNOCK-IN OPTION

A COMPLEX OPTION that leads to the creation of a EUROPEAN OPTION if the price of the UNDERLYING market reference moves above or below a predefined BARRIER level. See also BARRIER OPTION, DOWN AND IN OPTION, UP AND IN OPTION.

palgrave

0

51.18

11.1

0

8.99

10.4

8.58

13

KNOCK-OUT OPTION

A COMPLEX OPTION that extinguishes a EUROPEAN OPTION if the price of the UNDERLYING reference moves above/below a pre- defined BARRIER level. See also BARRIER OPTION, DOWN AND OUT OPTION, UP AND OUT OPTION.

palgrave

0

45.76

11.1

0

10.9

11

9.12

12

12.68

KONDRATIEFF WAVE

An observation put forth by Russian economist Nikolai Kondratieff that BUSINESS CYCLES are of a long-term nature, span- ning 50 years or more, during which time they alternate between periods of growth and contraction. Also known as SUPERCYCLE.

palgrave

0

52.19

10.7

0

13.4

13.7

11.23

13

14.97

KRUGERRAND

A coin minted by the South African government which con- tains 1 troy ounce of GOLD, commonly purchased by INVESTORS seeking physical gold.1where N is the number of observations, xi is an observation, μ is the mean, σ is the STANDARD DEVIATION.See also EXCESS KURTOSIS, LOGNORMAL DISTRIBUTION, NORMAL DISTRI-BUTION, SKEWNESS

palgrave

0

12.27

24

0

14.23

29.5

15.27

35

26.4

L

A broad measure of liquid money supply, generally defined as M3 plusGOVERNMENT BILLS, COMMERCIAL PAPER, BANKER’S ACCEPTANCES, and EUROCURRENCY DEPOSITS of residents.

palgrave

0

15.31

16.6

0

19.38

20.4

14.06

17

19.71

LABOR CODETERMINATION

A legal rule, found primarily in Continental European nations, requiring a certain number of labor representatives to be elected to a company’s BOARD OF DIRECTORS in order to give employees proper input into corporate affairs.

palgrave

0

10.57

20.5

0

14.63

21.9

12.14

26.5

24.29

LADDERED PORTFOLIO

An INVESTMENT PORTFOLIO comprised of NOTES and BONDS with short-, medium- and long-term MATURITIES, generally in approximately equal amounts. Such a portfolio provides the INVESTOR with exposure to the entire YIELD CURVE, generating INTEREST and PRINCIPAL redemptions on a steady basis over time. See also BARBELL PORTFOLIO.

palgrave

0

38.62

11.8

14.6

15.6

14.2

11.81

11.833333

14.79

LADDERING

An illegal practice where the UNDERWRITER of a NEW ISSUE of COMMON STOCK allocates SHARES to an INVESTOR if the investor agrees to purchase additional shares in the SECONDARY MARKET (which will help support the price and generate additional COMMISSIONS). See alsoSPINNING.

palgrave

0

20.39

20.8

0

14.93

25.5

11.73

29

23.47

LAG

The time period between the occurrence of a loss, or filing of a CLAIM by the INSURED, and the receipt of a SETTLEMENT from the INSURER.

palgrave

0

53.55

12.3

0

7.09

11.7

9.18

17

15.02

LAMBDA

See VEGA.

palgrave

0

77.91

2.9

0

-10.31

-1.7

11.63

0

0.8

LAND BANK

A specialized banking institution dedicated to financing of agricultural development, often with a long-term horizon. Also known asAGRICULTURAL BANK.

palgrave

0

11.07

14.1

0

19.69

15.8

11.59

7.25

18.54

LAPSE RATIO

In INSURANCE, a measure indicating the degree to which new policies are written and existing policies are renewed, generally computedby comparing the percentage of policies in force at the start of the year versusthose outstanding at the end of the year. A rising lapse ratio means policies arerolling off faster than new policies are being written and existing policies arebeing renewed.

palgrave

0

40.52

15.2

0

14.11

19.2

9.81

20.25

18.1

LAPSED OPTION

An IN-THE-MONEY OPTION that has expired and which hasnot been EXERCISED, resulting in an economic loss for the holder of the option.

palgrave

0

57.61

10.7

0

10.91

13.4

9.03

14

14.25

LARGE CAP STOCK

The COMMON STOCK of a company with a largeMARKET CAPITALIZATION, generally in excess of $5 billion. See alsoMICROSTOCK, MID-CAP STOCK.

palgrave

0

27.49

11.9

0

12.85

10.7

11.24

6.5

12

LARGE-DEDUCTIBLE POLICY

A LOSS-SENSITIVE INSURANCE CONT-RACT that features a DEDUCTIBLE that is much larger than one foundon a standard fixed PREMIUM, full INSURANCE contract. The INSUREDretains a much larger amount of RISK and pays the INSURER a smallerPREMIUM.

palgrave

0

53.21

10.3

0

14.32

14.1

11.99

12.5

13.87

LARGE LINE CAPACITY

The ability for an INSURER or REINSURER toUNDERWRITE a large RISK exposure under a single policy. Insurers and rein-surers with strong financial standing and significant CAPITAL resources aregenerally able to offer a greater amount of large line capacity without seekingREINSURANCE and RETROCESSION.

palgrave

0

16.32

16.2

0

17.93

18

11.82

17.5

19.83

LARGE LOSS PRINCIPLE

In INSURANCE, the concept of transferring highseverity/low frequency losses to an INSURER. Assuming fair PREMIUM pri-cing, the principle is often considered to be a prudent and cost-effective formof corporate RISK MANAGEMENT, as catastrophic loss events are very difficultto predict and quantify and can create significant FINANCIAL DISTRESS in theabsence of proper LOSS FINANCING.

palgrave

0

10.74

18.3

0

18.16

21.1

13.89

22.75

24.94

LASPEYRES’ INDEX

See BASE WEIGHTED INDEX.

palgrave

0

75.88

3.7

0

5.8

5.3

11.73

1

1.6

LAST IN FIRST OUT (LIFO)

An INVENTORY management and ACCOUN-TING approach where the last raw materials or work-in-progress inventoryacquired for production of final goods are used first. Costs and inventoryvaluation are thus based on the latest, and then earliest, items in inventory,regardless of whether this corresponds to the actual physical movement inthe inventory. See also FIRST IN FIRST OUT (FIFO).

palgrave

0

27.52

14

15.5

16.13

15.8

11.72

13.833333

15.32

LAST SALE

See LAST TRADE.

palgrave

0

119.19

-2.7

0

-2.38

0.5

0.15

0.5

1.2

LAST TRADE

The latest TRADE in a particular ASSET or SECURITY, whichyields the most current price at which identical positions can be valued. Alsoknown as LAST SALE.

palgrave

0

58.79

8.2

0

11.3

9.3

10.57

7.75

13

LAST TRADING DAY

The final day on which TRADING in a specificEXCHANGE-TRADED DERIVATIVE CONTRACT can occur.

palgrave

0

41.36

10.7

0

15.76

13.3

12.78

7.5

11.35

LATE TRADING

An illegal practice where clients enter MUTUAL FUND pur-chase ORDERS after the official market close in order to take advantage of latemarket-moving events.

palgrave

0

31.21

14.6

0

16.08

17.5

12.33

16.5

16.16

LATENT LIQUIDITY

Blocks of STOCK held by INSTITUTIONAL INVESTORS in their PORTFOLIOS that may be available for sale, but which are not activelyadvertised or marketed. Latent liquidity may be brought to market through the efforts of BROKERS, who communicate with investors and ascertain their will- ingness to sell portions of their positions.

palgrave

0

46.1

13

0

14.45

17.1

9.93

17

17.2

LAUNDERING

See MONEY .

palgrave

0

35.61

8.8

0

-7.41

0.8

0.1

0.5

0.8

LAYERING

The second stage in the MONEY LAUNDERING process, in which cash deposited during the PLACEMENT phase is used in a series of complex financial transactions in order to separate illicit funds from their real source and obscure any AUDIT trail. Layering can include wiring cash to other insti- tutions, purchasing BONDS, STOCKS, or other INVESTMENTS, or funding shell companies.

palgrave

0

41.53

14.8

0

13.7

18.6

12.06

19.75

17.9

LDC

See LESSER DEVELOPED COUNTRY.

palgrave

0

33.58

9.6

0

13.05

11.2

11.73

2

11.6

LEAD

The first UNDERWRITER or SYNDICATE on an INSURANCE POLICY underwritten via LLOYD’S OF LONDON, and the party responsible for estab- lishing the PREMIUM, issuing the policy, and collecting premiums.

palgrave

0

8.2

19.3

0

15.91

20.3

13.24

25.5

25.39

LEAD INDEPENDENT DIRECTOR

A DIRECTOR that serves as leader of the other independent members of the BOARD OF DIRECTORS. The role can be found in a SINGLE BOARD SYSTEM when the roles of the chairman and CHIEFEXECUTIVE OFFICER are combined, and is intended to reinforce external scrutiny of management affairs. Also known as PRESIDING DIRECTOR. See also EXECUTIVE DIRECTOR, NONEXECUTIVE DIRECTOR.

palgrave

0

39.84

11.3

14.6

12.52

11

9.8

11.25

14.08

LEAGUE TABLE

A tabulation of deals underwritten or advisories completed by financial intermediaries on behalf of companies and sovereigns.

palgrave

0

3.46

17

0

19.25

17.3

13.77

16.5

25.62

LEASE PURCHASE AGREEMENT

A form of LEASE where payments made by the LESSEE are allocated to the eventual purchase of the ASSET.

palgrave

0

69.11

8.3

0

8.07

8.9

10.4

11.5

11.81

LEASEBACK

See SALE AND .

palgrave

0

93.81

0.9

0

-6.26

-2.7

0.15

1

1.2

LEG

One component of a multicomponent financial transaction, often associated with structured DERIVATIVES, STRUCTURED NOTES, and other complex dealings.

palgrave

0

-6.02

18.6

0

23.37

21.9

13.3

15

20.53

LEGAL MECHANISM CONTROL

A structure or process where effective con- trol of a company is obtained through legal or structural mechanisms (e.g., a pyramid holding company) rather than the purchase of a majority share of COMMON STOCK. See also MAJORITY CONTROL, MANAGEMENT CONTROL, MINORITY CONTROL, TOTAL CONTROL, VOTING TRUST CONTROL.

palgrave

0

39.16

13.6

0

14.1

16.8

11.86

15.75

13.66

LEGAL OWNER

A person or institution that holds legal TITLE to an ASSET or INVESTMENT and can arrange for its sale or transfer, but who may not be entitled to right of use (i.e., it may lack a BENEFICIAL INTEREST). See alsoBENEFICIAL OWNER.

palgrave

0

50.67

11.3

0

8.07

10.3

9.27

13.25

14.05

LEGAL RESERVES

(1) RESERVES held by BANKS in support of demand and time DEPOSIT balances, generally necessary in order to comply with RESERVE REQUIREMENTS imposed by a governing CENTRAL BANK or monetary authority. (2) Reserves established by a company to cover possible legal contin- gencies or lawsuits.

palgrave

0

8.88

23.2

0

14.17

26.7

13.59

31.5

24.22

LEGAL RISK

The RISK of loss arising from failures in the legal process, including unenforceability of CONTRACTS or lack of appropriate documen- tation related to business arrangements such as GUARANTEES, MASTER AGREEMENTS, or LOAN agreements.

palgrave

0

21.06

18.5

0

17.42

23.5

12.93

23.5

21.68

LEGAL TENDER

MONEY that must be accepted in the settlement of amounts due.

palgrave

0

68.77

6.4

0

7.93

5.9

7.05

6.5

8.04

LEGGING

(1) Establishing or unwinding one of two segments of a STRADDLE, or STRANGLE, or INDEX ARBITRAGE program, or other complex TRADE, thus creating an exposure to the direction of the SECURITY or mar- ket until the accompanying position is added or the second LEG is unwound.(2) The process of slowly accumulating a position in a security.

palgrave

0

-2.29

27.5

0

11.45

30.1

12.9

40

28.83

LENDER

An individual or institution that provides funds to a BORROWER, either informally or formally, and with or without COLLATERAL. In exchange for providing funds, the lender generally expects recompense, which is levied via periodic INTEREST payments. See also CREDITOR.

palgrave

0

24.44

13.1

14.6

14.83

12.7

11.97

10.5

17.51

LENDING

The act of granting a LOAN to a customer. Lending is typically undertaken by BANKS and nonbank FINANCIAL INSTITUTIONS, and gener- ates CREDIT RISK.

palgrave

0

50.84

9.2

0

10.83

8.9

12.13

7

11.47

LENDING LIMIT

See LEGAL .

palgrave

0

35.61

8.8

0

-7.41

0.8

11.63

0.5

0.8

LEPO

See LOW EXERCISE PRICE OPTION.

palgrave

0

66.4

5.2

0

7.28

5.6

10.2

2.5

10

LESSEE

A party in a LEASE transaction that contracts to lease an ASSET from another party, paying periodic payments in exchange for use of the asset dur- ing a stated period. See also LESSOR.

palgrave

0

54.73

9.7

0

8.41

8.5

10.2

10.25

10.24

LESSER DEVELOPED COUNTRY (LDC)

A country that features an economy that is gradually developing and strengthening, but lacks a sufficiently robustindustrial production base to contribute in a meaningful way to national income and EXPORTS. LDCs may impose certain TRADE barriers and/or EXCHANGE CONTROLS in order to protect their economies from excessive IMPORTS or speculative inflows. As a result of nascent market conduits and often weak financial standing, LDCs are typically characterized by a high degree of SOVEREIGN RISK.

palgrave

0

21.02

16.5

16.7

15.73

17.8

11.69

18

19.07

LESSOR

A party in a LEASE transaction that leases an ASSET to another party, receiving periodic payments in exchange for providing use of the asset during a stated period. See also LESSEE.

palgrave

0

47.28

10.5

0

10.09

9.3

10.01

10.75

12.65

LETTER OF COMFORT

See COMFORT LETTER.

palgrave

0

59.97

5.6

0

5.35

6.8

0.15

0.5

1.2

LETTRES DE GAGE

In Luxembourg, a form of COVERED BOND backed by a BANK’s MORTGAGES. See also CEDULAS HIPOTECARIAS, HYPOTHEKENPFANDBRIEFE, IRISH ASSET COVERED SECURITIES, JUMBO PFANDBRIEFE, OBLIGATIONS FONCIERES, OFFENTLICHE PFANDBRIEFE.

palgrave

0

49.31

9.7

0

22.09

19.2

14.25

7.75

11.33

LEVEL PREMIUM

In INSURANCE, a PREMIUM that remains unchanged over time, even if the amount of RISK the INSURER assumes from the INSURED increases.

palgrave

0

57.61

10.7

0

11.2

13.4

11.19

15

16.07

LEVERAGE

The degree to which a company uses on- and OFF-BALANCE SHEET DEBT to fund its operations. Use of leverage magnifies the poten- tial RETURNS and RISKS of an INVESTMENT or corporate strategy. In gen- eral, the greater the amount of leverage, the riskier the financial standing of the company and the greater the expectation of higher returns by suppli- ers of CAPITAL. Also known as FINANCIAL , GEARING. See alsoDEBT SERVICE, INTEREST COVERAGE, LEVERAGE RATIOS, MODIGLIANI- MILLER THEORY, OPM, OPERATING LEVERAGE.Additional reference: Miller and Modigliani (1958).

palgrave

0

45.76

11.1

14

13.4

13.5

11.54

12.2

12.92

LEVERAGE ARBITRAGE

An ARBITRAGE scheme intended to take advan- tage of a misperception that creates a gap between a company’s CREDIT RATING and its actual financial activities/condition. This generally occurs when a highly rated company uses its strong rating to borrow a significant amount of DEBT at favorable rates and then invest in a range of speculativeASSETS.

palgrave

0

26.64

16.4

0

13.47

17.4

12.75

19.75

19.73

LEVERAGE EFFECT

The degree to which the use of DEBT on a company’s BALANCE SHEET impacts its EARNINGS PER SHARE and its DIVIDENDPAYOUT. Greater use of leverage magnifies earnings and losses, and its effects can be estimated via:⎝where EPS is EARNINGS PER SHARE, EBIT is EARNINGS BEFORE INTEREST AND TAXES, Δ is the change in the respective variable.

palgrave

0

51.52

13

0

11.2

15.9

11.23

17

15.49

LEVERAGE RATIOS

Measures that reflect the degree to which a company uses DEBT in its operations. Common ratios include DEBT TO EQUITY, DEBT TO ASSETS, and CONTINGENTS TO ASSETS.

palgrave

0

49.31

9.7

0

10.26

8.9

11.32

7.75

9.84

LEVERAGED UNIT TRUST

A UNIT TRUST that is permitted to use LEVERAGE, either through the issuance of DEBT or the use of DERIVATIVES, in order to enhance INVESTOR RETURNS. The RISK profile of the leveraged unit trust is greater than a standard unit trust, with the potential of producing greater returns and greater losses. See also LEVERAGED EXCHANGE-TRADED FUND.

palgrave

0

60.95

9.4

10.5

11.6

12

9.92

11

10.34

LGD

See LOSS-GIVEN DEFAULT.

palgrave

0

34.59

9.2

0

11.15

13

9.05

1.5

1.2

LIABILITY

A legal OBLIGATION to make a payment or repay a DEBT; a liabil- ity is often used to fund the purchase of a productive ASSET. Common liabil- ities include ACCOUNTS PAYABLE, COMMERCIAL PAPER, DEPOSITS, LOANS, NOTES, BONDS, and certain deferred TAXES and charges and OFF-BALANCE SHEET items. An increase in liabilities results in a CREDIT, while a decrease leads to a DEBIT.

palgrave

0

50.46

11.4

11.9

10.5

12.5

12.56

12.666667

11.51

LIABILITY INSURANCE

An INSURANCE CONTRACT providing an INSURED with coverage for losses sustained from payments it makes related to bodily injury or property damage. Coverage can be created for both per- sonal and business exposures, including comprehensive personal liabil- ity, COMMERCIAL GENERAL LIABILITY, employers liability, and workers compensation.

palgrave

0

-2.64

19.3

0

18.69

19.9

14.05

21

23.11

LIABILITY MANAGEMENT

The general practice of using a mix of funding instruments and markets, and INTEREST RATE and FOREIGN EXCHANGE HEDGES, in order to manage the LIQUIDITY RISK and MARKET RISK inherent in the corporate BALANCE SHEET.

palgrave

0

27.49

18.1

0

12.49

20.1

11.69

23.5

19.71

LIABILITY SWAP

An OVER-THE-COUNTER INTEREST RATE SWAP or CURRENCY SWAP that exchanges COUPONS or CURRENCIES from an under- lying LIABILITY in order to create a synthetic liability that meets a company’s preferred profile. See also ASSET SWAP.

palgrave

0

36.79

12.5

0

13.57

13.3

10.82

12.75

13.86

LIAR LOAN

A residential MORTGAGE that is granted by a BORROWER to a LENDER on the basis of little or no documentation proving INCOME and NET WORTH, and which is therefore subject to falsification. Liar loans have historically been part of the SUBPRIME MORTGAGE and ALT-A mortgage sec- tor. See also NINJA LOAN.

palgrave

0

54.22

9.9

10.5

10.15

10.1

10.05

10.166667

10.72

LICENSED CARRIER

See ADMITTED INSURER.

palgrave

0

9.21

12.7

0

9.23

9.9

14.31

2.5

27.87

LIEN

See SECURED INTEREST.

palgrave

0

34.59

9.2

0

9.23

9.9

14.31

1.5

14.53