Glossary

L

• Last Trading Day The final day for dealing in options contracts for a particular expiry month.
• Leverage Leverage is property rising or falling at a proportionally greater amount than comparable investments. For example, an option is said to have high leverage relative to the underlying stock because a price change in the stock may result in a relatively large increase or decrease in the value of the option. In general, in finance, leverage is the use of debt financing. Leverage, within a corporation, is the use of borrowed money to increase the return on investment. For leverage to be positive, the rate of return on the investment must be higher than the cost of the money borrowed.
• Leverage Ratio Leverage Ratio measures the relative contribution of stockholders and creditors, and of the firm's ability to pay financing charges. Value of firm's debt to the total value of the firm.
• Limited Liability Company A business form that provides its owners with corporate style limited personal liability & the tax treatment of a partnership  
• Liquid Fund   A fund that invests its corpus in short term instruments like call markets, treasury bills, Commercial Paper (CP), Certificate of Deposit (CD). Generally returns are very low in these funds. These funds are meant for the big corporate to park their fund for a very short period of time like one week.  
• Liquidation The sale of the assets of a firm, either voluntarily or in bankruptcy.  
• Liquidity Liquidity of an asset - The ability of an asset to be converted into cash without a significant price concession. Liquidity of a firm - This refers to the ability of the firm to pay off its debt as and when it becomes due.
• Liquidity ratio Ratio that measure a firm's ability to meet short-term obligation.
• Liquidity Risk The liquidity risk is involved in both type of securities i.e. fixed income security as well as equity and refers to the situation when these securities may not be sold in the market at close to their value.  
• Listing Admission of a security for trading on an organization exchange. A security so admitted is referred to as a listed security.