Investopedia Terms Beginning with "L" - Complete List
Labor Force
Definition: The total number of people employed plus the number of people unemployed but seeking
work.
Labor Force Participation Rate
Definition: The percentage of the working-age population that is either employed or actively seeking
employment.
Labor Market
Definition: The supply and demand for labor, where employees provide the supply and employers
provide the demand.
Labor Productivity
Definition: A measure of economic performance that compares the amount of goods and services
produced with the number of labor hours used.
Labor Theory of Value
Definition: An economic theory stating that the value of goods is determined by the amount of labor
required to produce them.
Labor Union
Definition: An organized group of workers who collectively negotiate with employers about wages,
benefits, and working conditions.
Laffer Curve
Definition: A theoretical representation of the relationship between government revenue raised by
taxation and all possible rates of taxation.
Lagging Indicator
Definition: An economic statistic that changes after the economy has already begun to follow a
particular pattern or trend.
Lambda
Definition: In options trading, one of the "Greeks" that measures the sensitivity of an option's price to
changes in volatility.
Land Contract
Definition: A real estate agreement where the buyer makes payments directly to the seller until the
purchase price is paid in full.
Land Value
Definition: The worth of a piece of land, typically determined by its potential use, location, and market
conditions.
Large Cap
Definition: Refers to companies with a market capitalization typically above $10 billion.
Large Value Transfer System (LVTS)
Definition: An electronic wire payment system in Canada for transferring large-value payments.
Last In, First Out (LIFO)
Definition: An inventory valuation method where the most recently acquired items are recorded as sold
first.
Last Trading Day
Definition: The final day on which trading is permitted for a particular futures or options contract.
Late Fee
Definition: A charge imposed when a borrower fails to make a payment by the specified due date.
Laundering
Definition: The process of making illegally obtained money appear to come from legitimate sources.
Law of Demand
Definition: An economic principle stating that, all else being equal, as the price of a good increases,
quantity demanded decreases.
Law of Diminishing Returns
Definition: An economic principle stating that adding more of one factor of production will at some
point yield lower incremental returns.
Law of Large Numbers
Definition: A statistical theorem describing the result of performing the same experiment a large number
of times.
Law of Supply
Definition: An economic principle stating that, all else being equal, an increase in price results in an
increase in quantity supplied.
Layaway
Definition: A purchasing method where a consumer places a deposit on merchandise to "lay it away" for
later pickup.
Lead Time
Definition: The amount of time that passes from the start of a process until its conclusion.
Leading Indicator
Definition: An economic statistic that changes before the economy starts to follow a particular pattern or
trend.
Lean Manufacturing
Definition: A production methodology focused on minimizing waste while maximizing productivity.
Learning Curve
Definition: A concept that describes how new tasks become easier over time as a person gains
experience.
Lease
Definition: A contract outlining the terms under which one party agrees to rent property from another
party.
Lease Option
Definition: An agreement that gives a renter the choice to purchase the rental property during or at the
end of the rental period.
Leasehold
Definition: An accounting term for an asset being leased, recorded on the balance sheet only if certain
criteria are met.
Ledger
Definition: A book or collection of accounts in which account transactions are recorded.
Legal Monopoly
Definition: A monopoly that is protected by law from competition.
Legal Reserve
Definition: The minimum amount of cash and cash-equivalent securities that a bank must hold.
Legal Tender
Definition: Money that is recognized by law as acceptable for meeting financial obligations.
Lehman Brothers
Definition: A former global financial services firm that filed for bankruptcy in 2008, triggering the global
financial crisis.
Lemon
Definition: A purchase that turns out to be defective or unsatisfactory after it has been bought.
Lemon Laws
Definition: Consumer protection laws that provide remedies for purchasers of defective vehicles.
Lender
Definition: An individual or institution that makes funds available to another with the expectation of
repayment.
Lender of Last Resort
Definition: An institution, usually a central bank, that offers loans to banks or other institutions
experiencing financial difficulty.
Letter of Credit
Definition: A document from a bank guaranteeing that a buyer's payment to a seller will be received on
time and for the correct amount.
Letter of Intent
Definition: A document outlining an agreement between two or more parties before the agreement is
finalized.
Level I, II, III Assets
Definition: Classifications of assets based on how easily their value can be determined using market-
based inputs.
Leverage
Definition: The use of borrowed capital to increase the potential return of an investment.
Leverage Ratio
Definition: A financial ratio that measures the amount of debt used to finance assets.
Leveraged Buyout (LBO)
Definition: The acquisition of another company using a significant amount of borrowed money.
Leveraged ETF
Definition: An exchange-traded fund that uses financial derivatives and debt to amplify the returns of an
underlying index.
Liability
Definition: A company's legal financial debts or obligations that arise during business operations.
Liability Insurance
Definition: Insurance that provides protection against claims resulting from injuries and damage to
people or property.
LIBOR (London Interbank Offered Rate)
Definition: A benchmark interest rate at which major global banks lend to one another in the
international interbank market.
Licensed International Financial Analyst (LIFA)
Definition: A professional designation for financial analysts who have met education and experience
requirements.
Lien
Definition: A legal right or interest that a lender has in the borrower's property, lasting until the debt
obligation is satisfied.
Life Annuity
Definition: An insurance product that pays out income and is primarily used as an income stream for
retirees.
Life Insurance
Definition: A contract between an insurance policyholder and an insurer where the insurer guarantees
payment upon the death of the insured.
Lifetime Value (LTV)
Definition: The total amount of money a customer is expected to spend in your business during their
lifetime.
LIFO Reserve
Definition: An accounting term that measures the difference between the FIFO and LIFO cost of
inventory for reporting purposes.
Limit Order
Definition: An order to buy or sell a stock at a specific price or better.
Limited Liability
Definition: A type of legal structure for an organization where a corporate loss will not exceed the
amount invested.
Limited Liability Company (LLC)
Definition: A business structure that combines elements of corporations and partnerships.
Limited Partner
Definition: A partner whose liability is limited to the extent of their investment in a partnership.
Limited Partnership
Definition: A form of partnership similar to a general partnership except that it has both general and
limited partners.
Line of Credit
Definition: An arrangement between a financial institution and a customer that establishes a maximum
loan balance.
Linear Programming
Definition: A mathematical method to determine the best outcome in a mathematical model with linear
relationships.
Liquid Asset
Definition: An asset that can be converted into cash quickly with minimal impact to the price received.
Liquid Market
Definition: A market with many available buyers and sellers and comparatively low transaction costs.
Liquidation
Definition: The process of converting assets into cash or cash equivalents by selling them on the open
market.
Liquidity
Definition: The degree to which an asset or security can be quickly bought or sold in the market without
affecting its price.
Liquidity Premium
Definition: Additional compensation demanded by investors for holding securities that cannot be easily
converted to cash.
Liquidity Ratio
Definition: A class of financial metrics used to determine a debtor's ability to pay off current debt
obligations.
Liquidity Risk
Definition: The risk that an entity will not be able to meet short-term financial demands.
Liquidity Trap
Definition: An economic situation where interest rates are low and savings rates are high, making
monetary policy ineffective.
Listing Requirements
Definition: The minimum standards that a company must meet before its shares can be traded on a
stock exchange.
Living Trust
Definition: A legal document that allows an individual's assets to be passed to beneficiaries without
going through probate.
Living Wage
Definition: The minimum income necessary for a worker to meet their basic needs.
Living Will
Definition: A written statement detailing a person's desires regarding their medical treatment in
circumstances where they cannot communicate.
Load
Definition: A sales charge or commission charged to an investor when buying or redeeming shares in a
mutual fund.
Load Fund
Definition: A mutual fund that comes with a sales charge or commission.
Loan
Definition: Money that is borrowed and expected to be paid back with interest.
Loan Modification
Definition: A change made to the terms of an existing loan by the lender as a response to the borrower's
long-term inability to repay.
Loan Officer
Definition: A bank employee who is responsible for approving mortgages, car loans, and other loans.
Loan Origination Fee
Definition: An upfront fee charged by a lender to process a new loan application.
Loan Shark
Definition: A person or entity that charges borrowers interest above an established legal rate.
Loan-to-Value Ratio (LTV)
Definition: A financial term used by lenders to express the ratio of a loan to the value of an asset
purchased.
Lock-Up Period
Definition: A window of time when investors are not allowed to redeem or sell shares of a particular
investment.
London Metal Exchange (LME)
Definition: A futures and forwards exchange with the world's largest market in options and futures
contracts on base metals.
Long Position
Definition: The buying of a security such as a stock, commodity, or currency with the expectation that the
asset will rise in value.
Long-Term Assets
Definition: Assets that cannot be converted to cash or consumed within one year.
Long-Term Capital Gain
Definition: A gain on an investment held for more than one year before being sold.
Long-Term Debt
Definition: Debt that matures in more than one year and appears on a company's balance sheet.
Long-Term Investment
Definition: An investment that a company plans to hold for more than a year.
Loss Leader
Definition: A pricing strategy where a product is sold at a price below its market cost to stimulate other
sales.
Lump Sum
Definition: A single payment made at a particular time, as opposed to a series of payments made over
time.
Luxury Tax
Definition: A tax placed on products or services that are considered essential or accessible only to the
super-wealthy.
Note: This comprehensive list contains major Investopedia terms beginning with "L" based on standard
financial terminology. The list covers various categories including labor economics, lending, liquidity, legal
concepts, and investment strategies.
