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Glossary of Investment Terms

 

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LEAPS

 

Long-term equity options traded on US exchanges and over-the-counter (OTC). Instead of expiring in two near-term and two farther out months as most equity options do, LEAPS expire in two to five years, giving the buyer a longer time for his strategy to come to realization.

 

 

 

Letter of Authorization (LOA)

 

A statement that certifies a particular action on behalf of the account holder(s).

 

 

 

Limit Order

 

An order to buy or sell a stated amount of stock at a specified price or better.

 

 

 

Liquid Assets

 

Refers to cash or items easily convertible to cash. For example: money-market fund shares, US Treasury bills, bank deposits.

 

 

 

Liquidation

 

To convert investment securities into cash.

 

 

 

Liquidity

 

The ability to have ready access to invested money.

 

 

 

Liquidity Risk

 

The ability to easily convert securities into cash. Determined by how active the secondary market is for a particular security.

 

 

 

Lot

 

Any group of goods or services making up a transaction. A Round Lot is a generally accepted unit of trading on a securities exchange. On the NYSE, a round lot is 100 shares of stock and $1000 or $5000 par value for bonds.

 

 

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