J, K, L Flashcards
Junior Bond Issue
A corporate bond issue, the collateral for
which has been pledged as security for other
more senior debt issues and is therefore
subject to these prior claims.
Junior Debt
One or more junior bond issues.
Keynesian Economics
Economic policy developed by British economist John Maynard Keynes who proposed that active government intervention in the market was the only method of ensuring economic growth and prosperity. See also Monetarism.
Know Your Client Rule (KYC)
The cardinal rule in making investment
recommendations. All relevant information
about a client must be known in order to
ensure that the registrant’s recommendations
are suitable.
Labour Force
The sum of the population aged 15 years
and over who are either employed or
unemployed.
Labour Sponsored Venture Capital
Corporations (LSVCC)
LSVCCs are investment funds, sponsored
by labour organizations, that have a specifi c
mandate to invest in small to medium-sized
businesses. To encourage this mandate,
governments offer generous tax credits to
investors in LSVCCs.
Lagging Indicators
A selection of statistical data, that on
average, indicate highs and lows in the
business cycle behind the economy as a
whole. These relate to business expenditures
for new plant and equipment, consumers’
instalment credit, short-term business
loans, the overall value of manufacturing
and trade inventories.
Large Value Transfer System
LVTS
A Canadian Payments Association
electronic system for the transfer of large
value payments between participating
fi nancial institution.
Leading Indicators
A selection of statistical data that, on average,
indicate highs and lows in the business cycle
ahead of the economy as a whole. These
relate to employment, capital investment,
business starts and failures, profi ts, stock
prices, inventory adjustment, housing starts
and certain commodity prices.
LEAPS
Long Term Equity Anticipation Securities
are long-term (2-3 year) option contracts.
Leverage
The effect of fi xed charges (i.e., debt
interest or preferred dividends, or both) on
per-share earnings of common stock.
Increases or decreases in income before
fi xed charges result in magnifi ed percentage
increases or decreases in earnings per
common share. Leverage also refers to
seeking magnifi ed percentage returns on an
investment by using borrowed funds,
margin accounts or securities which
require payment of only a fraction of the
underlying security’s value (such as rights,
warrants or options).
Liabilities
Debts or obligations of a company, usually
divided into current liabilities—those due
and payable within one year—and
long-term liabilities—those payable after
one year. A statement of fi nancial position
category
Liability Traders
Have the responsibility to manage a dealer’s
trading capital to encourage market fl ows
and facilitate the client orders that go into
the market, while aiming to lose as little of
that capital as possible. Liability traders can
be considered those who set the direction
for agency traders. Whereas agency traders
have formal client responsibilities, liability
traders have lighter responsibilities or none
at all.
Life Cycle
A model used in fi nancial planning that
tries to link age with investing. The
underlying theory is that an individual’s
asset mix will change, as they grow older.
However the life cycle is not a substitute for
the “know your client rule”.
Limit Order
A client’s order to buy or sell securities at a
specifi c price or better. The order will only
be executed if the market reaches or betters
that price
Limited Liability
The word limited at the end of a Canadian
company’s name implies that liability of the
company’s shareholders is limited to the
money they paid to buy the shares. By
contrast, ownership by a sole proprietor or
partnership carries unlimited personal legal
responsibility for debts incurred by the
business.
Limited Partnership
A type of partnership whereby a limited
partner cannot participate in the daily
business activity and liability is limited to
the partner’s investment.
Liquidity
- The ability of the market in a particular
security to absorb a reasonable amount of
buying or selling at reasonable price
changes. 2. A corporation’s current assets
relative to its current liabilities; its cash
position.
Liquidity Preference Theory
A theory that tries to explain the shape of
the yield curve. It postulates that investors
want to invest for the short-term because
they are risk averse. Borrowers, however,
want long-term money. In order to entice
investors to invest long-term, borrowers
must offer higher rates for longer-term
money. This being the case, the yield curve
should slope upwards refl ecting the higher
rates for longer borrowing periods.
Liquidity Ratios
Financial ratios that are used to judge the
company’s ability to meet its short-term
commitments. See Current Ratio.
Liquidity Risk
The risk that an investor will not be able to
buy or sell a security quickly enough
because buying or selling opportunities are
limited
Listed Stock
The stock of a company which is traded on
a stock exchange
Listing Agreement
A stock exchange document published when
a company’s shares are accepted for listing.
It provides basic information on the
company, its business, management, assets,
capitalization and fi nancial status.
Load
The portion of the offering price of shares of most open-end investment companies (mutual funds) which covers sales commissions and all other costs of distribution.
London InterBank Offered Rate
LIBOR
The rate of interest charged by large
international banks dealing in Eurodollars
to other large international banks.
Long Position
Signifi es ownership of securities. “I am long
100 BCE common” means that the speaker
owns 100 common shares of BCE Inc.
Long-Term Bond
A bond with greater than 10 years
remaining to maturity.
