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glossary


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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' installment credit, short-term business loans, the overall value of manufacturing and trade inventories.

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, profits, stock prices, inventory adjustment, housing starts and certain commodity prices.

Legal Investment

Certain securities may be legal for trustee investment under the Trustee Act of specific provinces or under the Canadian and British Insurance Companies Act 1932, as amended.

Leverage

The effect of fixed charges (i.e., debt interest or preferred dividends, or both) on per-share earnings of common stock. Increases or decreases in income before fixed charges result in magnified percentage increases or decreases in earnings per common share. Leverage also applies to seeking magnified 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 of a company, usually divided into current liabilities - those due and payable within one year - and long-term liabilities - those payable after one year.

Limit Order

A client's order to a broker to buy or sell at a specific price or better. The order can be executed only at that price or a better one.

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.

Liquidation

The process of converting securities or other property into cash. When a company is dissolved, cash remaining after sale of its assets and payment of all indebtedness is distributed to the shareholders.

Liquidity

The ability of the market in a particular security to absorb a reasonable amount of buying or selling at reasonable price changes.

Listed Stock

The stock of a company which is traded on a stock exchange.

Listing Statement

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 financial 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.

Locked In

When an investor has a profit on a security he owns but does not sell because of either the absence of a market or some legal restriction on the sale of the security. Also refers to an investor holding a security which has declined below the purchase price who cannot sell without incurring a loss.

Long

Signifies ownership of securities. "I am long 100 Bell common" means that the speaker owns 100 common shares of Bell Canada Enterprises Inc.

Long-Term Bond

A bond or debenture maturing in more than 10 years.


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