A loan is a financial transaction where a lender provides property, typically money, to a borrower, who promises to return the property with interest after a specified period.
Loan amortization refers to the reduction of debt by scheduled, regular payments of principal and interest sufficient to repay the loan at maturity. It is a fundamental concept in financial planning, allowing borrowers to understand how their loan is repaid over time.
A loan application is a document required by a lender prior to issuing a loan commitment. It typically includes details such as the name of the borrower, the amount and terms of the loan, a description of the collateral, and the borrower's financial and employment data.
Loan capital refers to the funds borrowed by an organization to finance its operations, subject to the payment of interest over the life of the loan, which is repaid at the end of the loan term.
Loan Closing refers to the final step in the process of securing a loan, particularly in real estate transactions. It encompasses all activities that transpire when the borrower and lender settle the terms and conditions of the loan agreement.
A loan commitment is an agreement by a financial institution to lend a specified amount of money on established terms in the future. This commitment outlines the conditions under which the loan will be provided and ensures the borrower of available funds when needed.
A Loan Creditor is an individual or institution that provides financing to a business or individual, thereby becoming entitled to repayment of the principal amount along with interest.
Loan fraud involves intentionally providing false information on a loan application to qualify for a loan. This can lead to civil liability or criminal penalties.
A loan officer is the person responsible for guiding borrowers through the loan application process, ensuring all necessary documentation is provided, and overseeing the processing of loan applications until approval.
A Loan Origination Fee is a charge levied by a lender for processing a new loan application, used as compensation for putting the loan in place.
A loan package is a comprehensive set of documents and information submitted to a lender to apply for a loan. These documents usually include a loan application, financial statements, and other pertinent information.
Loan stock is a type of fixed-income security that represents borrowed funds, usually in the form of bonds or debentures, which companies issue to raise capital on which interest is paid until the maturity or redemption date.
Loan value refers to the maximum amount a lender is willing to extend as a loan based on collateral or the cash value of a policy.
The Loan-to-Value Ratio (LTV) is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. It is critical in determining the risk of a loan, especially in mortgage lending.
The Loan-to-Value (LTV) ratio is a financial metric used by lenders to evaluate the risk involved in lending a borrower against the value of the asset being purchased.
Lobbying expenditures refer to the amounts paid or incurred in connection with influencing federal or state legislation, or any communication with certain federal executive branch officials in an attempt to influence their official actions or positions. These expenditures are not tax deductible.
A lobbyist is a person retained with compensation by an individual, group, or organization to influence the formation of legislation or the administration of rules, regulations, and policies.
A Local Area Network (LAN) refers to a system that connects computers and other devices within a relatively small and specific area, typically a single building or campus, enabling the sharing of resources and information quickly and efficiently.
A Local Area Network (LAN) connects individual computer terminals or nodes within a limited area using various media like coaxial cables, optical fibers, or standard telephone lines. Typically set up for businesses, schools, or within single buildings, LANs facilitate faster computing, collaboration, and communication.
A Local Area Network (LAN) is a network of computers and associated devices linked together within a limited area or a common environment, such as an office building or a home.
Local taxation is a form of taxation levied by a local government authority rather than by central government. In the UK, council tax and business rates are the main forms of local taxation.
A local union represents the bargaining unit within an organization, with significant authority over the work environment compared to the national union.
A popular real estate mantra emphasizing the paramount importance of location in determining the value of urban real estate. While crucial, several other factors interact with location to influence property value.
Lock box services are advanced cash management systems used to streamline the collection and processing of receivables to enhance a company's cash flow efficiency.
A lock-up option is a defensive strategy used in corporate takeovers, granting a friendly suitor the option to acquire valuable assets or shares (referred to as 'crown jewels') of a target company in the presence of a hostile takeover attempt.
Lock, stock, and barrel is an idiomatic expression originating from the components of a rifle, signifying the entirety of something, often used to describe the complete acquisition or involvement in a business or endeavor.
A lockbox is a specialized service in which a bank receives clients' payments directly at a designated P.O. Box, processes these payments, and provides a detailed record to the recipient.
A term used in finance to denote secured rates of return, commodities positions in static markets, and investor withholding due to tax implications.
A locked-in interest rate is a rate promised by a lender at the time of loan application. The promise is a legal commitment of the lender, though there may be qualifications or contingencies that allow the lender to charge a higher rate. On home loans, the lock-in is customarily provided for 1% of the amount borrowed, though often it is free of charge. However, many prospective lenders find ways to renege on commitments when interest rates rise.
A lockout is a management action that prevents employees from performing work in the organization until a labor settlement is reached, physically barring them from entering the workplace.
A loft apartment is a large, adaptable open space, often industrial or warehouse spaces, which have been converted into residential use. Recently, new loft constructions have also been designed for residential purposes.
Establishing a connection from a terminal to a computer and identifying oneself as an authorized user.
The comprehensive plan for scheduling the delivery of required supplies and materials at destinations as needed.
A logo, also known as a logotype, is a unique design, symbol, or special representation used to identify and distinguish a company, organization, or product, often trademarked for intellectual property protection.
A highly recognizable and iconic design, often a wordmark or lettermark, that represents the brand identity of a business or organization.
The Lombard Rate refers to the interest rate at which the German central bank, the Bundesbank, lends to German commercial banks, typically ½% above the discount rate. It can also refer to the interest rate charged by a European commercial bank on loans secured by marketable assets.
Lombard Street is a key financial district located in the City of London, renowned for being the historical heart of the money market. It houses many commercial banks, bill brokers, and discount houses, with the Bank of England nearby.
The approach adopted by London banks to handle customers facing a cash-flow crisis involves collective decision-making, equitable sharing of information, and extended support.
The world's largest market for gold and silver trading, operated by the London Bullion Market Association (LBMA), sets global standards for bullion quality and trading.
LCH is a leading multi-asset clearing house established in 1888, providing risk management, netting, and settlement services. It became well-known as the International Commodities Clearing House before merging with Clearnet in 2003 to form LCH.Clearnet.
The London Code of Conduct is a set of guidelines aimed at promoting ethical and professional behavior in the financial markets operating in London.
London Gold Fixing, also known simply as Gold Fixing, is a procedure by which the price of gold is determined in the London bullion market. It takes place twice daily and is a crucial process for the international gold market.
The London Inter Bank Mean Rate (LIMEAN) represents the mean of bid and offer rates offered by major banks on the London interbank market. It is used as a benchmark for interest rates and financial pricing.
Learn about the London Inter Bank Mean Rate (LIMEAN), its definition, examples, frequently asked questions, related terms, and additional resources.
The London Interbank Bid Rate (LIBID) is the interest rate at which banks bid for funds to borrow from one another in the London interbank market. It is considered the counterpart to the London Interbank Offered Rate (LIBOR).
The London Interbank Offered Rate (LIBOR) is the interest rate that the most creditworthy international banks dealing in Eurodollars charge each other for large loans. Serving as the equivalent of the federal funds rate, LIBOR is often used as a base rate for other large Eurodollar loans issued to less creditworthy corporate and government borrowers.
LIBOR, or the London InterBank Offered Rate, is the rate at which banks offer to lend to each other on the London interbank market. It serves as a global benchmark for interest rates on loans and financial instruments, with terms ranging from overnight to five years.
An exchange in London where financial futures and options products are traded. Known for its influential role in the global financial markets.
The London Metal Exchange (LME) is the world's largest non-ferrous metals exchange, trading in options and futures contracts in metals such as copper, aluminium, nickel, zinc, and lead, and is regulated by the UK Financial Conduct Authority.
The London Stock Exchange (LSE) is the primary stock exchange in the United Kingdom, offering equity, derivative, and information services. It has a rich history dating back to the seventeenth century and has undergone significant reforms to become one of the world's leading exchanges.
A long bond is a bond that matures in more than 10 years. These bonds are riskier than shorter-term bonds of the same quality but normally pay investors a higher yield.
In finance, a long coupon refers to the first interest payment of a bond issue, which covers a longer period than the subsequent payments or an interest-bearing bond maturing in more than 10 years.
A long position is a financial strategy where an investor purchases a security or a derivative expecting that its price will rise over time, allowing for a profitable sale in the future.
In financial markets, a long position refers to the purchase of a security, commodity, or currency with the expectation that its value will increase over time. This term is often used in the context of stock trading, futures contracts, and foreign exchange markets.
A period of time long enough for an industry to make all necessary adjustments to changing economic conditions, to increase or decrease capacity, or for firms to enter or leave the industry.
A detailed analysis provided by an auditor, examining a client's financial statements in depth to ensure accuracy, compliance, and to provide insights into the financial health of the organization.
Long-range planning involves strategizing for periods exceeding five years, taking into account the future impacts of present, short-range, and intermediate-range events. It is a crucial aspect of strategic management and organizational development.
Long-Term Capital Gain (Loss) refers to the profit or loss earned from the sale of securities or capital assets held for more than 12 months. This gain or loss has special tax implications for individual and corporate taxpayers.
Long-Term Care (LTC) encompasses the day-to-day care provided to individuals, usually over the age of 65, either in nursing facilities or at home. This care is necessary following illness, injury, or due to age when a person is no longer able to perform at least two out of the five basic activities of daily living: walking, eating, dressing, using the bathroom, and moving from one place to another.
A long-term contract spans multiple accounting periods and involves the design, manufacture, or construction of significant assets, such as in construction or civil engineering industries. Proper accounting measures must be taken to allocate reasonable profit to each period.
Long-term debt, also known as long-term liability, refers to loans and financial obligations that are due in more than a year. These obligations often include bonds and notes payable, with periodic interest payments and the principal due upon maturity.
Long-term debtors refer to individuals or entities that owe money to an organization but are not expected to make payment within the near future, typically beyond a 12-month period.
A long-term lease generally refers to a commercial lease of five years or longer, or a residential lease longer than one year. It involves a contractual agreement between a landlord and tenant for the use of a property for a prolonged period.
Long-term liabilities are any financial obligations or debt that are not payable on demand or within one year. These can include loans, bonds payable, mortgages, and other financial obligations.
Long-term liabilities are financial obligations of a company that are due more than one year in the future. Examples include bonds payable, long-term loans, and lease obligations.
An observable pattern or direction in data that persists over an extended period. It can significantly impact decision-making and expectation setting in various fields like finance, economics, and business.
The Long-Wave Cycle, also known as the Kondratieff Cycle, refers to a theorized cycle in the modern world economy spanning approximately fifty to sixty years, marked by periods of high sectoral growth followed by declines.
Longevity pay refers to salary or wages that are based on an employee’s seniority or length of service with an organization. The greater the length of service, the greater the longevity pay. It may also include bonuses for remaining on a job beyond a certain period.
The 'Loonie' is the colloquial term for the Canadian dollar coin, distinguished by an engraving of a common loon on one side and a portrait of Queen Elizabeth II on the reverse.
In computer programming, a loop is a set of statements that are executed repeatedly. Loops are fundamental for controlling the flow of a program and are key for performing repetitive tasks efficiently.
A technicality making it possible to circumvent a law's intent without violating its letter. Often used to refer to gaps in rules that allow for unintended advantages.
A management method that emphasizes a generally relaxed supervisory style where individual creativity and contributions are encouraged.
A graphic depiction of income distribution across the population, indicating the degree of economic inequality.
In accounting, a loss is the amount by which the expenses of a transaction or operation exceed the income produced.
Loss carryback is a tax strategy that allows businesses to apply a net operating loss (NOL) from a current year to offset income from previous years, typically up to three years. This can result in a tax refund for taxes paid in those previous years.
Loss carryforward involves the practice of applying current year's net operating losses to future years' net incomes for tax purposes. It's typically employed when a loss carryback is not feasible.
Loss carryover refers to a tax mechanism that allows individuals or businesses to apply a net operating loss (NOL) to future tax years, offsetting taxable income.
The Loss Denial Rule, often referred to in tax contexts, precludes taxpayers from claiming deductions for expenses or losses associated with activities not engaged in for profit, commonly referenced as 'hobby losses.'
Loss exposure in insurance refers to areas in which the risk of loss exists. Four primary loss risk areas are property, income, legal vulnerability, and key personnel within an organization.
A product or service offered for sale by an organization at a loss in order to attract customers for other products or services.
Loss of a key person in a business refers to the significant impact on the firm due to the departure of an essential individual from the organization due to death, disability, sickness, resignation, incarceration, or retirement. It can lead to financial instability, loss of market share, and additional expenses in training replacements. Key person insurance helps mitigate these risks.
Loss of income insurance provides coverage in property insurance for an employee’s lost income if a peril such as fire damages or destroys the place of employment, causing the worker to become unemployed. Additionally, in health insurance, it compensates for lost income when an insured becomes disabled and cannot work.
The loss ratio measures the ratio of losses incurred (or loans losses for banks) to either total premiums earned by an insurer or the overall receivables or debts for a corporation within a specific period, often one year.
Management methods used to limit the extent of losses when they do happen. Practicing strict legal compliance with all environmental laws and safety procedures as well as maintaining good public relations is extremely important in managing loss reduction when unfortunate situations develop.
Relief available to sole traders, partnerships, and companies making losses, as adjusted for tax purposes.
The lot and block method is a system used for locating and identifying parcels of land based on a designated lot number and block number as assigned on a plat map of a subdivision.
A lot line is a boundary line that defines the perimeter of a piece of property as described in a survey.
A contest that requires a purchase to be made in order to qualify for a random drawing. In contrast to sweepstakes, lotteries are considered a form of gambling and are therefore not legal under U.S. Postal Service regulations governing direct mail promotions.
Lotus 1-2-3 was an integrated computer software package produced by Lotus Development Corporation, widely regarded as one of the best-selling business decision-making tools of its time. This software combines spreadsheet functionalities with data management and graphics capabilities.
The lowest price paid for a security over a specified period, often a year, or since trading in the security began.
A low-ball offer is a significantly lower bid than the listing price, often suggesting that the buyer believes the property is overvalued or is seeking a bargain deal.
A term used to describe products or materials that are of lower quality. Low-grade items often lack the durability, strength, or aesthetic appeal of higher-grade alternatives.
Low-tech products use earlier or less developed technology, often characterized by simplicity and ease of use. These products typically have fewer technological complexities and are designed to fulfill basic needs or functions without incorporating advanced technical elements.
An alleged practice where auditors reduce their fees for statutory audits to attract clients, intending to compensate through highly profitable non-audit services.
The method of valuing current assets and work in progress as required by UK generally accepted accounting practice and the Companies Act; however they are measured in a company's management accounts.
The 'Lower of Cost or Market (LCM)' principle is a conservative accounting convention that dictates that inventory should be reported at either its historical cost or its current market price, whichever is lower.
The Lower of Cost or Market (LCM) accounting method involves recording inventory at its historical cost but writing it down to market value if that is lower. Market value is defined as replacement cost, capped by net realizable value (NRV) and cannot be less than NRV minus a normal profit margin.
The Lump of Labor Hypothesis is an economic assertion that suggests a zero-sum game scenario where there is a fixed amount of work available within an economy, implying that any increase in productivity or technological advancement will directly reduce the number of available jobs. This hypothesis is widely considered to be fallacious by most economists.
In life insurance, a lump sum refers to a single payment made instead of a series of installments. This is typically issued to beneficiaries upon the policyholder's death.
A payment of the entire amount of retirement benefits due at one time rather than in installments.
