Datasets:
sohomghosh
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FinRAD_Financial_Readability_Assessment_Dataset

Dataset card Data Studio Files Community
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terms
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LIEN STATUS
The seniority of a LOAN backed by property (or other ASSETS) in the event of BORROWER DEFAULT and forced liquidation. The first lien holder has first claim on the RESIDUAL VALUE of the asset, and is followed by the second lien holder and other junior lien holders.CATASTROPHE BOND, MORTGAGE DEFAULT SECURITIZATION, RESIDUAL VALUE SECURITIZATION, WEATHER BOND.
palgrave
0
26.14
16.6
0
13.58
18.1
10.38
18.5
16.2
LIFE ANNUITY
An ANNUITY that stops payments to the ANNUITANT or BENEFICIARY once the person covered is deceased. See also CERTAIN ANNUITY.
palgrave
0
35.95
10.7
0
11.4
8.5
9.66
6
10
LIFE ASSURANCE
In the United Kingdom, LIFE INSURANCE.
palgrave
0
56.93
6.8
0
9.15
7.5
6.57
3
9.07
LIFE INSURANCE
An INSURANCE CONTRACT providing for a payment to a named BENEFICIARY in the event the INSURED dies; life insurance is avail- able in many forms, including term life, whole life, ordinary life, and group life, each with different characteristics related to coverage, costs, and savings. See also LIFE ASSURANCE, LIFE REINSURANCE.
palgrave
0
45.59
13.2
0
13.29
17
10.16
18.75
18.04
LIFE REINSURANCE
A REINSURANCE agreement where an INSURER cedes LIFE INSURANCE policies to a REINSURER individually (through FACULTATIVE REINSURANCE) or as a PORTFOLIO (TREATY REINSURANCE).
palgrave
0
14.29
17
0
19.56
20.8
12.33
20.5
21.37
LIFEBOAT
A rescue fund established by a CENTRAL BANK or monet- ary authority to ensure BANKS have access to sufficient CAPITAL in the event of a FINANCIAL CRISIS.
palgrave
0
44.07
13.8
0
9.87
14.2
13.16
18.5
16.73
LIFETIME FLOOR
An INTEREST RATE FLOOR embedded in a long-term CONTRACT that limits the lowest rate a BORROWER may pay on an ADJUSTABLE RATE MORTGAGE. The lifetime floor prevents the LENDER’s mortgage rate from falling below some predefined level in a falling rate environment.
palgrave
0
58.62
10.3
0
12.71
13.8
9.94
13
13.16
LIFT THE OFFER
See TAKE THE OFFER.
palgrave
0
92.8
1.3
0
-1.46
-0.7
0.2
1
1.6
LIFTING A LEG
The process of LEGGING out of a transaction.
palgrave
0
80.28
4.1
0
6.45
4.4
9.95
4
8.2
LIMEAN
See LONDON INTERBANK MEAN.
palgrave
0
50.5
7.2
0
8.7
7.7
11.73
2
11.6
LIMIT BUY ORDER
An ORDER to buy SECURITIES if a target level is reached, with no assurance the order can be filled at the limit price. See also LIMIT SELL ORDER.
palgrave
0
65.73
7.6
0
5.97
5.4
7.71
7
8.46
LIMIT ON CLOSE ORDER
An ORDER to buy or sell SECURITIES at the mar- ket close, but only if the closing price is better than the limit specified.
palgrave
0
64.04
10.3
0
6.45
10.2
8.77
14
12.93
LIMIT ORDER
An ORDER for the purchase or sale of a SECURITY at a spe- cific price limit. If the price is not attained the order expires unfilled or it remains open until the client instructs otherwise. See also MARKET ORDER, STOP ORDER, TIME ORDER.
palgrave
0
65.42
7.7
7.8
7.47
7
8.39
6.833333
6.65
LIMIT PRICE
An EXECUTION price on an ORDER the reflects a specific BID or OFFER. See also MARKET PRICE.
palgrave
0
62.85
6.6
0
5.53
3.6
6.84
4.25
8.11
LIMIT SELL ORDER
An order to sell SECURITIES if a target level is reached, with no assurance the order can be filled at the LIMIT PRICE. See also LIMIT BUY ORDER.
palgrave
0
65.73
7.6
0
5.97
5.4
7.71
7
8.46
LIMITED (LTD)
In the United Kingdom and former colonies, as well as Japan and the United States, a LIMITED COMPANY that is INCORPORATED and thus has LIMITED LIABILITY.
palgrave
0
36.63
14.6
0
10.91
14.7
9.18
18
15.02
LIMITED COMPANY
In the United Kingdom, a form of private LIMITED LIABILITY COMPANY where the LIABILITY of participants for the company’s outstanding DEBTS is limited to their INVESTMENT in fully paid SHARES. See also LIMITED, PUBLIC .UNLIMITED LIABILITY.
palgrave
0
10.91
16.2
0
14.32
14.1
8.92
15
14.98
LIMITED MARKET
Any marketplace that is either ILLIQUID or where the number of active buyers is very small.
palgrave
0
72.16
7.2
0
9.63
8.9
8.38
8
8.9
LIMITED PRICE INDEX SWAP
A form of INFLATION SWAP used in the United Kingdom that features a CAP and/or a FLOOR to limit the inflation- based payout to one or both parties.
palgrave
0
59.98
11.8
0
7.26
12.8
8.97
16
12.63
LIMITED RECOURSE LOAN
See PARTIAL RECOURSE LOAN.
palgrave
0
75.88
3.7
0
8.7
7.7
11.73
1
1.6
LINE
A general class of INSURANCE offered by INSURERS, typically grouped into one of five types: LIFE INSURANCE, health insurance, ANNUITY, PROPERTY AND CASUALTY INSURANCE, and LIABILITY INSURANCE. See also LIMIT.
palgrave
0
13.95
15
0
15.19
14.2
10.17
13.5
15.33
LINE LIMIT
The maximum LINE of INSURANCE an INSURER will UNDERWRITE without seeking excess protection via REINSURANCE. The size of the line limit depends on an insurer’s financial resources and expertise, its ability to diversify and reinsure, and its willingness to assume RISK of a par- ticular type and magnitude.
palgrave
0
30.2
15
0
13.58
15.9
13.05
19
21.27
LINE OF CREDIT
See REVOLVING CREDIT FACILITY.
palgrave
0
-8.73
15.5
0
14.5
12.4
15.68
3
21.6
LINEAR INSTRUMENT
A financial ASSET or transaction, such as a COMMON STOCK, FORWARD, or FUTURE that provides a unit payoff for a unit move in the underlying asset. Linear instruments feature no CONVEXITY. See alsoNONLINEAR INSTRUMENT.
palgrave
0
43.09
10.1
11.9
11.75
9.6
11.16
7
12.76
LINEAR INTERPOLATION
A technique of INTERPOLATION that uses a straight line to connect two points on a YIELD CURVE. The missing point can be computed by first determining the fractional number of days:where ti is the number of days required from known point t1 to the target date, t2 is the number of days at the end of the period.And then determining the interpolated rate:St = S1(1 − λ) + s2 ( λ)where S1 is the first known SPOT RATE, S2 is the second known spot rate. Also known as STRAIGHT LINE INTERPOLATION. See also CUBIC SPLINE INTERPOLATION, EXPONENTIAL INTERPOLATION.
palgrave
0
47.32
12.6
12.6
10.04
13.2
9.14
15
12.47
LINEAR PAYOFF
A linear and constant economic gain or loss that may be expected under a conventional DERIVATIVE (e.g., FUTURE or FORWARD) for a given range of market prices. For every unit move up or down in the market price, the gain or loss is a linear function of that unit move. See alsoASYMMETRIC PAYOFF, NONLINEAR PAYOFF, SYMMETRIC PAYOFF.
palgrave
0
60.65
9.5
11.9
9.46
10.7
9.29
11.833333
12.51
LINKER
In the United Kingdom, an INFLATION-LINKED SECURITY.
palgrave
0
22.07
11.9
0
15.67
13
10.75
4.5
14.23
LIQUID
(1) At a corporate level, the state of possessing sufficient cash to meet obligations. (2) At a market level, the state of having sufficient trans- action volume to permit TRADING. See also IL, ASSETS, ITY.
palgrave
0
53.71
10.1
0
8.93
10.4
10.82
11.25
11.57
LIQUID RATIO
See QUICK RATIO.
palgrave
0
93.81
0.9
0
-0.46
2.1
9.05
0.5
1.2
LIQUIDATED DAMAGES
DAMAGES awarded to a plaintiff that can be quan- tified very precisely, e.g., through ex-ante definition in a CONTRACT. See alsoSTATUTORY DAMAGES, UNLIQUIDATED DAMAGES.
palgrave
0
42.38
10.3
0
14.72
13
13.44
7
11.47
LIQUIDATING DIVIDEND
A DIVIDEND, payable by a company to SHAREHOLDERS, that represents a final return of CAPITAL. The dividend is paid when a company is halting its operations and no longer requires capital.
palgrave
0
47.28
10.5
0
10.84
10
8.99
12.25
11.36
LIQUIDATION
(1) A state of corporate BANKRUPTCY that culminates in the disposal of ASSETS and payment of any RESIDUAL VALUE to CREDITORS; liquidation generally occurs when efforts at REORGANIZATION have failed.(2)The sale of assets by a company to cover an expected or unexpected pay- ment, or the sale of COLLATERAL held by a creditor to cover funds due from the BORROWER/DEBTOR. (1) Also known as WINDING-UP. (1) See alsoCREDITORS’ VOLUNTARY LIQUIDATION, VOLUNTARY LIQUIDATION.
palgrave
0
-26.99
34.9
0
14.35
40.5
12.91
56
37.69
LIQUIDATION PERIOD
(1) In a VALUE-AT-RISK model, the assumed hori- zon over which a PORTFOLIO of ASSETS can be sold in order to neutralize RISK and recognize gains or losses. In most models a single liquidation period is applied to all asset classes, regardless of the inherent level of risk or LIQUIDITY.(2)In the INSURANCE sector, the period during which a previously funded ANNUITY provides CASH FLOWS to the ANNUITANT. (1) Also known asHOLDING PERIOD.
palgrave
0
26.48
18.5
0
11.44
20.4
12.22
25.5
21.62
LIQUIDATOR
An AGENT, typically appointed by a court, that is responsible for carrying out the LIQUIDATION of a company in BANKRUPTCY.
palgrave
0
25.8
14.6
0
11.72
12.8
10.16
17
20
LIQUIDITY FACILITY
A CREDIT line provided by a BANK to a customer that is used to cover short-term funding requirements arising from CASH FLOW gaps. Such facilities may be drawn on a revolving basis, and are generally repayable within 1 year.
palgrave
0
60.14
9.7
0
9.63
10.6
10.27
12.25
12.93
LIQUIDITY PREFERENCE THEORY
A theory of INTEREST RATES indicating that INVESTORS will expect a higher return for ASSETS they prefer not to hold, leading to the creation of a LIQUIDITY PREMIUM (which is often expressed as the difference between FORWARD RATES and expected future SPOT RATES). The theory also allows for the fact that investor expectations help determine the shape of the YIELD CURVE, as set forth via the EXPECTATIONS THEORY. See also MARKET SEGMENTATION THEORY.Additional references: Hicks (1946); Lutz and Lutz (1951); Meiselman (1962).
palgrave
0
35.31
15.1
15.9
13.23
17.7
10.77
18.666667
16.29
LIQUIDITY PREMIUM
The additional SPREAD that INVESTORS demand for holding ASSETS they prefer not to hold (including those that may be risky or ILLIQUID). Under the LIQUIDITY PREFERENCE THEORY the liquidity pre- mium is also an increasing function of expectations regarding rising INTEREST RATES.
palgrave
0
33.24
13.8
0
14.62
15.5
12.2
15.5
16.97
LIQUIDITY RISK
The RISK of being unable to raise funding or sell or pledge ASSETS when needed without incurring a significant cost. Liquidity risk, whichis a form of FINANCIAL RISK, is commonly segregated into three components: ASSET LIQUIDITY RISK, FUNDING LIQUIDITY RISK, and ASSET-FUNDING LIQUIDITY RISK. See also ENDOGENOUS LIQUIDITY, EXOGENOUS LIQUIDITY, LIQUIDITY, LIQUIDITY SPIRAL.
palgrave
0
11.21
16.1
16.7
16.24
15.9
9.88
14.5
13.87
LIQUIDITY SPIRAL
A self-fulfilling cycle where concerns about a com- pany’s LIQUIDITY cause CREDITORS to cancel CREDIT facilities, which leads to a repeated cycle of ASSET sales, CREDIT RATING downgrades, and further credit facility cancellations. The cycle continues until the company is able to secure sufficient funding or enters a stage of FINANCIAL DISTRESS. See alsoLIQUIDITY RISK.
palgrave
0
27.52
14
14.6
15.2
14.8
12.3
13.166667
15.32
LIQUIDITY WAREHOUSE
A PORTFOLIO of unencumbered INVESTMENT GRADE SECURITIES that a company maintains in order to manage LIQUIDITY requirements that cannot be adequately met via existing unsecured funding. When additional cash is required a company can pledge or sell the unencum- bered ASSETS from the warehouse at, or near, carrying value. The liquidity warehouse generally comprises of short- and medium-term securities with sta- ble prices and strong CREDIT RATINGS.
palgrave
0
23.46
15.5
17.1
15.38
16.7
11.58
17.166667
17.28
LISTED COMPANY
A company that is listed and traded on a STOCK EXCHANGE. See also PRIVATE COMPANY, PUBLIC COMPANY.
palgrave
0
54.39
7.8
0
7.62
5.5
6.84
4.75
3.4
LISTED DERIVATIVE
See EXCHANGE-TRADED DERIVATIVE.
palgrave
0
-50.02
21
0
26.63
25.6
14.31
2.5
14.53
LISTING REQUIREMENTS
The specific rules that a company must fulfill in order to become a LISTED COMPANY with its SHARES traded on a STOCK EXCHANGE. Such requirements vary by national jurisdiction and exchange, but generally relate to the disclosure of full and complete FINANCIAL STATEMENTS on a regular basis, and the maintenance of a particular ASSET value.
palgrave
0
35.1
15.2
0
12.54
16.6
11.03
19.75
18.27
LITIGATION
The process of taking legal action in a court of law, with a plain- tiff bringing suit against a defendant.
palgrave
0
76.56
7.6
0
7.37
9.3
9.37
11
10
LLC
See LIMITED LIABILITY COMPANY.
palgrave
0
-51.03
21.4
0
14.5
12.4
11.73
4
21.6
LLOYD’S BROKER
A BROKER that specializes in placing INSURANCE with LLOYD’S SYNDICATES operating in the LLOYD’S OF LONDON marketplace.
palgrave
0
28.84
13.5
0
16.88
15.3
12.84
13.5
18.56
LLOYD’S OF LONDON
A London-based INSURANCE marketplace comprised of LLOYD’s SYNDICATES (i.e., a group of NAMES) that UNDERWRITE a broadrange of insurance, REINSURANCE, and RETROCESSION covers. Lloyd’s itself does not write any insurance, though it maintains a backup RESERVE fund to cover any possible crisis situation. See also LLOYD’S BROKER.
palgrave
0
38.62
11.8
14.1
15.48
14.5
11.47
11.5
12.24
LLOYD’S SYNDICATE
A group of NAMES within LLOYD’S OF LONDON that specializes in UNDERWRITING specific types of RISKS.
palgrave
0
55.24
9.5
0
12.53
11.3
13.31
11
13.9
LLP
See LIMITED LIABILITY PARTNERSHIP.
palgrave
0
-51.03
21.4
0
20.3
17.1
15.68
4
31.6
LOAD
(1) In INVESTMENT MANAGEMENT, the sales COMMISSION charged to INVESTORS buying certain MUTUAL FUNDS. (2) In INSURANCE, see EXPENSE ING, PREMIUM ING. (1) See also FUND.
palgrave
0
36.63
14.6
0
12.02
17.3
14.64
19
19.63
LOAD FUND
A MUTUAL FUND that levies an upfront sales charge on INVESTORS; sales COMMISSIONS are generally added to the NET ASSET VALUE to generate the total purchase price. Despite the sales charge, load funds are not always more expensive than NO-S, which may have higher management and/or exit fees.
palgrave
0
55.58
11.5
0
11.67
14.5
11.41
15
14.6
LOAN LOSS PROVISION
A noncash expense reflected through a BANK’s INCOME STATEMENT that is used to increase the LOAN LOSS RESERVE estab- lished for NONPERFORMING LOANS.
palgrave
0
56.59
11.1
0
14.05
15.6
12.33
13.5
12.68
LOAN LOSS RESERVE
A CREDIT RESERVE established by a BANK to cover the potential charge-off of NONPERFORMING LOANS (i.e., those that are classed as past-due or nonaccrual). The reserve is typically shown as a CONTRA ACCOUNT on the ASSET portion of the BALANCE SHEET,and is increased through LOAN LOSS PROVISIONS taken via the INCOME STATEMENT.
palgrave
0
45.09
13.4
0
12.36
16.3
10.7
16.5
15.02
LOAN PARTICIPATION
See PARTICIPATION LOAN.
palgrave
0
9.21
12.7
0
13.12
13
9.05
1.5
14.53
LOAN SALE
The process of selling a portion of a SYNDICATED LOAN between BANKS, or to INVESTORS. Although loans are not traded in a SECONDARY MARKET as actively as SECURITIES, the loan sale makes it possible to create a certain degree of LIQUIDITY.
palgrave
0
50.67
11.3
0
10.04
11.4
10.82
12.75
12.1
LOANBACK
In the United Kingdom, a transaction where an individual bor- rows against funds accumulated in a PENSION account, generally on a short- term basis.
palgrave
0
30.2
15
0
12.02
15.1
10.75
16
16.27
LOBSTER TRAP
An ANTITAKEOVER DEFENSE provision that prevents an INVESTOR (or RAIDER) holding more than 10% of a company’s COMMON STOCK from exchanging any CONVERTIBLE BONDS into voting class stock. See also SCORCHED EARTH DEFENSES.
palgrave
0
54.73
9.7
0
14.21
13.4
11.63
11.25
13.87
LOCAL
An individual TRADING on an EXCHANGE using personalCAPITAL.
palgrave
0
-12.79
17
0
17.36
13.2
11.93
5
13.2
LOCAL AUTHORITY BILL
In the United Kingdom, a BILL OF EXCHANGE that is drawn on a local government authority.
palgrave
0
55.24
9.5
0
8.18
8
7.39
9
8.9
LOCAL AUTHORITY BOND
In the United Kingdom, a BOND that is issued by a local government authority. Such bonds are typically issued with fixed COUPONS and medium-term MATURITIES.
palgrave
0
50.33
9.3
0
11.53
9.7
10.57
7.25
9.8
LOCKBOX
A service provided by a BANK to corporate customers where it receives payments by mail into a post box which it collects several times per day; the payments are deposited by the bank immediately so that the corporate customers can begin earning INTEREST immediately.
palgrave
0
18.36
21.6
0
12.72
24.4
10.13
30
22.15
LOCKED MARKET
A temporary market phenomenon where the BID and OFFER for an ASSET are precisely equal. A locked market, which gener- ally lasts only for short periods of time, can appear when there is little news driving the market and participants lack strong directional views, or when extremely competitive forces on both sides of the market draw the bid and offer SPREAD in.See RATE LOCK.(1) A time period during which the NOTIONALPRINCIPAL of an AMORTIZING SWAP or ACCRETING SWAP cannot be
palgrave
0
30.88
18.9
0
11.67
22.1
10.36
26
22
LOCKUP
A time period in a financial transaction that must pass before an action can occur or be taken such as REDEMPTION, LIQUIDATION orCONVERSION.
palgrave
0
31.21
14.6
0
12.25
14.2
10.27
17.5
19.63
LOCKUP OPTION
An OPTION, granted to a friendly WHITE KNIGHT by a company that is a potential TAKEOVER TARGET, which allows the friendly party to purchase the company’s most valuable ASSETS (i.e., the CROWN JEWELS) in the event of a HOSTILE TAKEOVER.
palgrave
0
39.34
17.7
0
10.57
21.6
11.15
23
18
LOGNORMAL DISTRIBUTION
A single-tailed statistical distribution of a RANDOM VARIABLE where the logarithm is normally distributed, i.e., for any normally distributed variable x, y = exp(x) features a lognormal distribution. Financial ASSETS are often modeled using the lognormal distribution. The probability density function is given as:1where x is an observation, μ is the MEAN, σ is the STANDARD DEVIATION. See also KURTOSIS, NORMAL DISTRIBUTION, SKEWNESS.
palgrave
0
21.9
14.1
15.6
15.66
14.7
12.3
12.625
13.94
LOMBARD RATE
(1) A short-term INTEREST RATE used in the German market, generally applied to LOANS collateralized by SECURITIES. (2) The interest rate charged by BANKS in Europe against SECURITIES pledged asCOLLATERAL.
palgrave
0
15.65
18.5
0
15.62
21
12.49
22
18.67
LONDON BULLION MARKET
The official marketplace for the wholesale TRADING of GOLD and silver and the establishment of prices, conducted by DEALERS (e.g., major international BANKS and bullion specialists) under the general auspices of the BANK OF ENGLAND. See also GOLD FIXING.
palgrave
0
43.22
12.1
0
13.63
14.4
11.49
13.25
13.95
LONDON INTERBANK BID (LIBID)
The BID side of the London INTERBANK DEPOSIT market, or the INTEREST RATE that a prime BANK must pay for inter- bank funds. See also LONDON INTERBANK MEAN, LONDON INTERBANK OFFERED RATE.INTEREST RATE at which a BANK will DEPOSIT or accept interbank funds. See also LONDON INTERBANK BID, LONDON INTERBANK OFFERED RATE.
palgrave
0
53.92
10
12.5
11.19
11.4
6.62
11.333333
8.46
LONG
See POSITION.
palgrave
0
-6.7
14.7
0
1.3
7.8
11.63
1
20.8
LONG AND WRONG
A LONG POSITION (purchased or owned) that loses money as a result of sudden or steady price declines.
palgrave
0
70.13
8
0
8.52
9.6
10.67
9
9.42
LONG ARBITRAGE
An ARBITRAGE strategy employed in the FUTURES mar- ket when the FORWARD RATE is lower than the futures rate, indicating that the cash market is overpriced when compared with the futures market; the strategy calls for selling the UNDERLYING ASSET and buying futures. See alsoSHORT ARBITRAGE.
palgrave
0
48.13
12.3
0
13.29
15.2
10.27
14.5
12.68
LONG BOND
In the United States, the 30-year TREASURY BOND issued by the government.
palgrave
0
76.22
5.6
0
10.37
8.9
9.5
6
4.8
LONG CARRY
The CARRY generated by a LONG position, defined for FIXED INCOME positions as daily COUPON income less daily financing costs; daily price AMORTIZATION/ACCRETION can also be included. See also SHORT CARRY.
palgrave
0
38.82
11.7
0
14.03
12.7
10.01
10.75
15.23
LONG-DATED FORWARD
Any FORWARD transaction with a final MATURITY in excess of 1 year.
palgrave
0
50.84
9.2
0
7.93
6.1
10.81
7
11.47
LONG END
The long MATURITIES of the YIELD CURVE, generally taken to mean those in excess of seven to ten years. See also BELLY OF THE CURVE, SHORT END.
palgrave
0
74.69
6.2
0
6.2
5.6
7.81
6.75
8.36
LONG HEDGE
A LONG POSITION in a DERIVATIVE CONTRACT or financial instrument that is used to protect a natural SHORT POSITION. As rising prices cause a loss on the natural short position, the long hedge produces an offset- ting gain; the reverse occurs with falling prices. See also SHORT HEDGE.
palgrave
0
63.7
8.4
12.5
10.21
9.7
9.04
10.666667
10.57
LONG ONLY
A common HEDGE FUND or INVESTMENT strategy where a manager creates a PORTFOLIO of LONG positions in an EQUITY market. The strategy only permits the manager to express views on stocks that are believed to be undervalued. A long only portfolio generates SYSTEMATIC RISK and IDIOSYNCRATIC RISK. See also MARKET NEUTRAL.
palgrave
0
41.56
10.6
13.4
11.64
9.5
10.46
8.625
12.18
LONG POSITION
A purchased or owned position in a financial ASSET that benefits from price appreciation. In order to realize a gain generated by rising prices, the long position must be sold or offset. Also known as LONG. See alsoSHORT POSITION.
palgrave
0
53.07
8.3
11.2
9.02
6.6
8.98
5.875
10.07
LONG-TERM DEBT
Any form of DEBT with a MATURITY date of more than 10 years, depending on jurisdiction or ACCOUNTING rules. In some jurisdic- tions long-term debt is interpreted more narrowly as any debt maturity in the forthcoming fiscal period. See also MEDIUM-TERM DEBT, SHORT-TERM DEBT.
palgrave
0
56.55
9
13.6
11.42
10.6
10.11
10.666667
14.06
LONG-TERM PRIME RATE (LTPR)
In Japan, a key long-term fixed INTEREST RATE, historically set as a fixed spread above the 5-year funding rate of select domestic BANKS.
palgrave
0
65.05
9.9
0
10.74
13.6
10.27
14.5
14.42
LONG THE BASIS
An ARBITRAGE or TRADING strategy where a LONG POSITION in a cash instrument is HEDGED by a SHORT POSITION in FUTURES or FORWARDS.
palgrave
0
48.13
12.3
0
9.75
12
10.27
16.5
16.16
LONGEVITY BOND
See MORTALITY BOND.
palgrave
0
34.59
9.2
0
5.35
6.8
14.31
1.5
14.53
LOOKBACK OPTION
An OVER-THE-COUNTER COMPLEX OPTION that grants the buyer a maximum gain by “looking back” over the price path of the ASSET and determining the point that creates the greatest economic profit. See also FLOATING STRIKE , OPTION ON THE MAXIMUM/ MINIMUM.
palgrave
0
51.18
11.1
0
12.3
13.3
10.55
13.25
12
LOONIE
The Canadian dollar.
palgrave
0
34.59
9.2
0
7.32
8.3
9.05
1.5
14.53
LOOPHOLES
Exceptions or exemptions in a TAX code that can be legally exploited in order to reduce tax LIABILITIES. See also TAX AVOIDANCE, TAX EVASION.
palgrave
0
50.84
9.2
0
9.61
7.7
10.15
7
11.47
LOSS
Any deficit remaining after all costs have been subtracted from the REVENUE or selling price of a good or service or any deficit arising from the disposal of an asset at a price that is unfavorable compared to its original con- tract price. See also PROFIT.
palgrave
0
65.05
9.9
0
9.35
11.8
9.93
14
13.55
LOSS ADJUSTER
A professional appointed by, but remaining independent of, an INSURER to negotiate settlement of a CLAIM under an INSURANCE POLICY. See also LOSS ASSESSOR.
palgrave
0
25.46
12.7
0
12.75
10.5
10.81
11
19.8
LOSS ADJUSTMENT EXPENSE
The cost an INSURER must bear in adjust- ing a CLAIM under an INSURANCE contract; some portion of the expense is generally passed back to INSUREDS through LOAD charges. Insurers that are efficient in their claims procedures have greater ability to lower their loss adjustment expenses and either improve their margins or reduce their load charges.
palgrave
0
51.52
13
0
12.83
17.1
11.51
18.5
17.63
LOSS ASSESSOR
A professional appointed by an INSURED to negotiate settlement of a CLAIM with an INSURER under the terms of an INSURANCE POLICY. See also LOSS ADJUSTER.
palgrave
0
41.36
10.7
0
9.96
8.2
10.35
9
14.43
LOSS AVERSION
The degree to which an INVESTOR alters behavior in the face of a loss. While conventional financial theories assume behaviors for gains or losses are perfectly symmetric, theories of loss aversion suggest that inves- tors may be reluctant to realize losses as quickly as they realize gains.
palgrave
0
39.16
13.6
0
12.65
14.8
11.19
17.25
17.06
LOSS-BASED MODEL
See CREDIT DEFAULT MODEL.
palgrave
0
50.5
7.2
0
7.25
6.5
15.68
1
1.6
LOSS CONTROL
A RISK MANAGEMENT TECHNIQUE where a firm employs safety precautions to reduce the likelihood that a particular RISK will impact its operations and create a loss. Loss controls may be physical, such as fire or security safety equipment, or intangible, such as training and educa- tion. Also known as LOSS PREVENTION. See also LOSS FINANCING, RISK REDUCTION.LOSS FINANCING, PRE-LOSS FINANCING, RISK REDUCTION.
palgrave
0
38.82
11.7
14.2
13.57
12.6
10.52
11.5
13.94
LOSS FREQUENCY METHOD
In INSURANCE, a mechanism used to estab- lish a core PREMIUM level by projecting the expected number of future losses in a given RISK class over a particular time frame. Also known as LOSS RATE. See also LOSS RATIO METHOD.
palgrave
0
57.98
8.5
11.2
7.64
6.8
9.82
7.666667
11.32
LOSS GIVEN DEFAULT
A value or percentage estimate of the amount, net of RECOVERY, which a BANK expects to lose if a COUNTERPARTY DEFAULTS (i.e., –1 RECOVERY RATE). Loss given default is an essential input into internaland regulatory CREDIT DEFAULT MODELS as it provides a financial estimate of the net amount that may ultimately be lost should a counterparty fail.
palgrave
0
34.09
15.6
0
11.49
16.7
10.04
20.25
17.72
LOSS PREVENTION
See LOSS CONTROL.
palgrave
0
93.81
0.9
0
1.52
3.6
9.05
0.5
1.2
LOSS RATE
See LOSS FREQUENCY METHOD.
palgrave
0
75.88
3.7
0
8.7
7.7
11.73
2
11.6
LOSS RATIO
In INSURANCE, a measure of an INSURER’s ability to cover losses and LOSS ADJUSTMENT EXPENSE with PREMIUMS, generally com- puted as:where L is loss (from CLAIMS), LAE is loss adjustment expense, and Pr is premium.The lower the ratio, the more premium the insurer preserves as profit. Also known as EXPECTED LOSS RATIO, PERMISSIBLE LOSS RATIO. See alsoCOMBINED RATIO, EXPENSE RATIO.
palgrave
0
34.26
13.5
15
12.3
13.8
10.68
14.333333
15.33
LOSS RATIO METHOD
In INSURANCE, a mechanism used to modify a core PREMIUM level by uniform percentages for related types of RISKS in order to align actual and expected LOSS RATIOS. See also LOSS FREQUENCY METHOD.
palgrave
0
46.27
10.9
0
10.38
9.9
11.63
12.75
17.51
LOSS RESERVES
A RESERVE account established by an INSURER or REINSURER that includes an estimate of CLAIMS reported and adjusted but not yet paid, claims reported and filed but not yet adjusted, and claims INCURRED BUT NOT REPORTED; the latter is often difficult to estimate on an ex-ante basis and actual results only appear over time.RETROSPECTIVELY RATED POLICIES.
palgrave
0
6.18
26.3
0
13.83
31.6
12.34
41
28.83
LOSSES INCURRED
In INSURANCE, a measure of the amount of PREMIUMS earned by the INSURER that must be allocated to cover losses; losses incurredcan serve as a basis for establishing LOSS RESERVES. See also LOSSES OUTSTANDING.
palgrave
0
45.76
11.1
0
11.6
11.3
9.59
12
15.04