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Here is a list of common financial terms. Click on the letter that corresponds with the first letter of the financial term to get the definition.
Leverage
A company is leveraged when it has a high ratio of debt to equity. If the company can use the extra debt to expand and generate more than enough additional revenue to cover the higher interest costs, then the leverage is beneficial to the current shareholders, that is, each share has been leveraged. Limit Order
Order that sets a specific price (Limit Price) that is the highest a buyer will pay or the lowest a seller wants to receive. Buyer will accept price lower than limit and seller higher than limit. It may be a Day or GTC (Good Until Canceled) order. If no price is indicated, the order is a market order by default. Limited Partnership
A business or investment where limited partners provide capital, share in profits, have limited legal liability, and leave the management of the business to general partners. Can be tradable and listed on an exchange, packaged and sold by brokers and not exchange tradable, or tradable to other partners only. REITS (real estate investment trusts) are popular LPs. Most LPs provide both income and appreciation. Some are highly liquid and others not. Liquidity
The ability to turn an asset into cash. A highly liquid asset is easy to sell because an active market exists that sets prices which are continuously adjusted for supply and demand. An example is a listed stock or mutual fund. A less liquid asset is real estate or a collectible. Loan Value
Maximum percentage of current market value of margin eligible securities that a brokerage firm can lend a margin account client. Long Investments
Long investments are investments that you have bought with the goal of price appreciation and/or income generation. Short investments, on the other hand, are first sold and then bought back. Long-Term Growth
Securities whose price appreciation is anticipated over the long term; i.e., a year or more. Long-term growth securities tend to be more stable and appreciate at a slower, albeit steadier rate than do maximum capital gains securities. Lot
A group of identical UNITS (for securities) or nearly identical units (for collectibles) of an investment that are traded at the same time and price. Open lots are the contents of open investments and can be long (buys) or short (short sell). Closed lots are the contents of closed investments and can be long (sell) or short (buy to cover).
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