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LABOUR SPONSORED VENTURE CAPITAL CORPORATION (LSVCC)
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A fund sponsored by a labour organization in which individuals or entities pool their money to invest in small businesses. Individuals who invest in these shares receive a 15% federal tax credit based on the acquired cost of these shares, up to a maximum credit of $750. In addition, some provinces provide an additional tax credit of 15%, up to a maximum of $750. These shares are also qualified investments for Registered Retirement Savings Plans.
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LAGGING INDICATOR
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An economic indicator that changes after the overall economy has changed. Examples of these include labour costs, business spending, the unemployment rate, the prime rate, outstanding bank loans and inventory book value.
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LAMBDA
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A value that represents the ratio of a change in the price of an option to a small change in the option’s volatility.
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LARGE CAP
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A public company with over a $5 billion market capitalization in Canada and over a $20 billion market capitalization in the U.S.
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LEADING INDICATOR
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An economic indicator that changes before the economy has changed. Examples of these include production workweek, building permits, unemployment insurance claims, money supply, inventory changes and stock prices.
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LEAPS
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See Long Term Equity Anticipation Securities.
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LIABILITIES
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Debts or obligations of a company, usually divided into current liabilities, which are due and payable within one year, and long-term liabilities which are payable after one year. Also known as a general balance sheet category.
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LIBOR
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See London InterBank Offered Rate.
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LIF
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See Life Income Fund.
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LIFE ANNUITY
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An annuity under which payments are guaranteed for the life of the annuitant.
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LIFE INCOME FUND (LIF)
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Similar to a registered retirement income fund (RRIF), except a LIF receives funds from a locked-in registered retirement savings plan. The RRIF minimum withdrawal requirements also apply to a LIF. Also, the provincial pension benefit acts and the federal Pension Benefits Standards Act impose restrictions on the maximum amount that can be withdrawn from a LIF in a given year.
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LIQUIDATION
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The process of converting securities or other property into cash or cash equivalents. When a company is dissolved, the cash that is left after the sale of its assets and payment of all liabilities is distributed amongst the shareholders.
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LIQUIDITY
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The ability of the market in an individual security or securities to absorb a reasonable amount of buying or selling at price spreads that are not large. It may also represent a corporation's current assets relative to its current liabilities or in other words its cash position.
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LIQUIDITY PREFERENCE THEORY
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A theory that tries to explain the shape of the yield curve. It hypothesizes that investors would rather invest for the short-term due to their risk aversion preferences. Borrowers, on the other hand, prefer longer-term investors. In order to encourage investors to invest long-term, borrowers must offer higher rates for longer-term investors. This being the case, the yield curve should slope upwards reflecting the higher rates for longer borrowing time periods.
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LOAD
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Commissions that are charged to the holders of mutual fund units. These can be charged at the time of purchase (front-end load) or at the time of redemption (back-end load).
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LOCKED-IN REGISTERED RETIREMENT SAVINGS (SAME AS LIRA) PLAN (RRSP)
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An RRSP that is set up to receive funds that are transferred from a registered pension plan on the condition that it is used solely for retirement income purposes.
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LONDON INTERBANK OFFERED RATE (LIBOR)
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The rate of interest charged by large international banks that deal in Eurodollars to other large international banks.
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LONG POSITION
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The situation of actually owning an instrument such as a security, contract or commodity. May also be called a long position and is the opposite of a short position.
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LONG STRADDLE
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A straddle in which a long position is undertaken in both a put and a call option. May also be called a bull straddle and is the opposite of a short straddle.
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LONG-TERM
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A long period of time, as for a fixed income instrument (e.g. 10 or more years) or for a buy and hold investment strategy.
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LONG-TERM DEBT
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Debt that becomes due after more than one year.
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LONG-TERM EQUITY ANTICIPATION SECURITIES (LEAPS)
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Long-term stock options or index options, withexpiration dates up to three years away.
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LONG-TERM INTEREST RATE
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The Interest rate that is applied on money loaned for a period greater than 10 years. Normally longterm rates are higher than short-term rates because lenders require a larger return for risking their capital for a lengthier period of time.
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LOSS CARRY-OVER
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A business or investment loss that is incurred in one year that may be used as a deduction from taxable income in a subsequent year.
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LSVCC
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See Labour Sponsored Venture Capital Corporation.
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