Growth Investing Stock Market Glossary
From A for ‘Asset’ to Z for the ‘Zero-Coupon Yield Curve’ — your comprehensive guide to everything that matters in the markets.
Laffer curve
Theoretical connection between tax rate and tax revenue with a maximum at moderate burden.
Lagging Indicator
Economic indicator that shows turning points delayed compared to the overall cycle.
Lambda (options Greek)
Elasticity of the option price to percentage changes in the underlying asset.
Large Cap
Stock category with high market capitalization and typically high liquidity.
Largely risk-free rate (RFR)
Reference interest rates such as €STR, SOFR, or SARON as a replacement for traditional IBORs.
Last Look
Broker's right in foreign exchange trading to confirm or reject a requested quote shortly before execution.
Late payment interest
Interest or penalties for late payment/filing in certain legal jurisdictions.
Late payment interest
Interest on late payment of contractual or legal obligations.
LBO (Leveraged Buyout)
Company acquisition with a high level of debt capital to leverage the return on equity.
Lead arranger
Bank in the underwriting syndicate with placement and advisory tasks.
Lead Manager
Lead bank responsible for bookbuilding and pricing.
Lead-Lag-Analysis
Investigation of leading and lagging relationships between markets, sectors, or indicators.
Leadership stock
Market leader within a sector with above-average relative strength.
Leading index
Central market index of a country or segment, often used as a benchmark.
Leading Indicator
Key figure that typically signals turning points before the entire cycle.
Leasing liability
Liability from IFRS 16-Leases, which reflects future lease payments.
Legal entity
Legal entity such as AG or GmbH with its own legal capacity and liability.
Legal reserve
The legally required equity reserve shown in the balance sheet.
Lemon Problem
Information asymmetry, where poor quality displaces good quality (Adverse Selection).
Lending Availability
Indicates how easily a security can be borrowed for short selling and affects the borrowing fee.
Lending Fee
Loan fee in securities lending, determined by the supply and demand of the security.
Leverage
Leverage effect of debt on return and risk of equity.
Leverage
Debt ratio or leverage effect of debt on equity return.
Leverage effect
Change in return on equity due to higher or lower leverage.
Leverage Ratio
Capital ratio, which measures indebtedness in relation to balance sheet or risk positions.
Leveraged Loan
High-yield corporate loan with lower collateral and covenant structure.
Levered Beta
Beta taking into account the capital structure (debt influence) of a company.
Liability
Legally due financial obligation of a company to third parties.
LIBOR
Historical interbank reference rate, largely replaced by alternative risk-free rates.
LIFO (Last In, First Out)
Evaluation method for inventory with the departure of the most recently acquired items first.
Limit
Price limit of an order to control the maximum payment or minimum sales threshold.
Limit Order
Order with fixed maximum/minimum price for controlled execution.
Limit Order
Order not yet released for execution or partially visible in the trading system.
Limit Up/Limit Down
Stock exchange price ranges to limit short-term extreme movements.
Limited Partner (LP)
Limited liability investor in private equity/VC fund structures.
Linienchart
Chart representation exclusively with closing prices as a simple trend overview.
Liquid assets 2nd degree (Quick Ratio)
Ratio of short-term, quickly liquidatable assets to short-term liabilities.
Liquidation
Liquidation of positions or companies with realization of assets.
Liquidation value
Sum of the partial values of a company in a hypothetical breakup.
Liquidation value
Estimated proceeds from the sale of assets in case of company dissolution.
Liquiditätsfalle
Situation in which interest rate cuts have little stimulating effect due to lack of credit demand.
Liquiditätsprämie
Additional return requirement for less liquid investments.
Liquiditätsquote (LCR)
Bank key figure from highly liquid assets in relation to net outflows of the next 30 days.
Liquidity
Ability to quickly convert assets into cash at low cost.
Liquidity-at-Risk (LaR)
Risk measure for potentially required liquidity under stress scenarios.
Listed Company
Publicly traded company with official listing and ongoing disclosure obligations.
Listing
Listing of a security for trading on a regulated market.
Listing Requirements
Admission requirements of a stock exchange such as minimum size, free float, and transparency.
LME (London Metal Exchange)
Significant futures exchange for industrial metals with physical delivery structure.
Loan Covenant
Contractual ancillary condition in credit agreements with monitoring and sanction mechanisms.
Loan portfolio
Total amount of loans granted by an institution by sectors and ratings.
Loan shark interest
Unreasonably high interest rate with legal challengeability.
Loan-to-Deposit Ratio (LDR)
The ratio of loans granted to deposits of a bank as a liquidity indicator.
Loan-to-Value (LTV)
Relationship of a loan to the loan-to-value ratio of a collateral object.
Lock-up period
Period that affects the tax or regulatory treatment of securities.
Lognormal distribution
Distribution in which the logarithm of the variable is normally distributed; a common model for prices.
Lohnstückkosten
Labor costs per unit of production as a competitive and inflation indicator.
Lombardkredit
Secured loan with variable loan-to-value ratio by securities.
Long
Position with profits in rising prices.
Long Call
Purchase of a call option to participate in rising prices with limited risk.
Long Duration
Portfolio positioning with high interest rate sensitivity in favor of falling interest rates.
Long Only
Investment style with exclusively long positions without a short component.
Long Put
Buying a put option as a hedge or speculation on falling prices.
Long Straddle
Buying call and put options with the same strike and expiration for a volatility bet.
Long Tail
Portfolio or revenue distribution with many small positions/products on the edge.
Long Volatilität
Positioning that benefits from increasing volatility.
Long/Short
Market-neutral or opportunistic strategy with combined long and short positions.
Look-Through
Analyse, which makes the underlying assets of a vehicle transparent.
Lookback-Option
Option with payout profile based on the maximum/minimum of the underlying asset during the term.
Loss Aversion (Verlustaversion)
Tendency to weigh losses more heavily than gains of equal magnitude.
Loss Given Default (LGD)
Expected loss share of a loan in default after realization of collateral.
Loss on sale
Loss from the sale of an asset, when the proceeds are below the costs.
Loss Ratio (Schadenquote)
Insurance indicator based on claims expenses in relation to earned premiums.
Lot size
Standardized number of units or minimum trading unit of a contract or security.
Low Beta
Low sensitivity to market movements as a risk characteristic.
Low Duration
Portfolio positioning with low interest rate sensitivity in favor of more stable prices in case of rising interest rates.
Low interest rate environment
Market phase with very low interest rates and yields that shape the search for returns and valuation.
Low Touch Trading
Electronic order execution with minimal dealer interaction.
Low Volatilität
Factor or style characteristic for low volatility of a security or portfolio.
Lower Bound
Effective lower bound of interest rates due to cash alternatives or market frictions.
Lower of cost or market principle
Principle of the German Commercial Code (HGB) to recognize assets at the lower of cost or fair value.
LSE (London Stock Exchange)
Great European stock exchange headquartered in London.
LTV (Customer Lifetime Value)
Derived customer value from contribution margins over the expected customer relationship.
