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What Is a Graphics Processing Unit (GPU)? Definition and Examples A Graphics Processing Unit (GPU) is a specialized electronic circuit or chip designed to accelerate the creation and rendering of images, video, and animations for display. Originally developed to improve graphics performance for video games and video editing, GPUs are now widely used for other…

Granular Portfolio: What It Is and How It Works A granular portfolio is an investment portfolio that holds a large number of positions across many asset classes, sectors, and securities. High granularity—sometimes called near-infinite granularity—aims to diversify away unsystematic (security-specific) risk so the portfolio is mainly exposed to systemic (market) risk that cannot be eliminated…

Grantor Trust Rules: Overview and Key Takeaways A grantor trust is one in which the person who creates the trust (the grantor) is treated as the owner of the trust assets for income tax—and in many cases estate tax—purposes. Grantor trusts can be revocable or irrevocable. Revocable trusts are typically treated as owned by the…

Understanding Grantors: Trust Creators and Options Writers A grantor is a party that creates or grants something of legal or financial significance. In finance and law, the term most commonly refers to two distinct roles: the person who establishes a trust and the party who writes (sells) options contracts. Both uses involve transferring rights or…

Grantee A grantee is the recipient of a grant, scholarship, property, or other transferred interest. The party transferring the interest is the grantor. Identifying grantor and grantee is important in legal documents because those documents specify the rights, duties, and limitations associated with the transfer. Key takeaways A grantee receives an asset or interest (e.g.,…

Federal Grants-in-Aid: Overview and Examples A federal grant-in-aid is money the federal government awards to fund a specific project or program carried out by state or local governments, educational institutions, nonprofit organizations, and sometimes businesses. These funds are drawn from federal revenues and are not loans—recipients do not repay the grant—but they must use the…

Grant Deed A grant deed (also called a special or limited warranty deed) is a legal document that transfers ownership of real property from a seller (grantor) to a buyer (grantee). It provides limited assurances about the title: more protection than a quitclaim deed but less than a general warranty deed. What a grant deed…

Small-Business Grants: What They Are and How They Work A small-business grant is a financial award—typically from a government agency, foundation, corporation, or nonprofit—given to a business to support a specific purpose. Grants are essentially gifts and generally do not need to be repaid, but recipients must use the funds according to the grant terms…

Grandfather Clause: Definition, History, and How It Works A grandfather clause (also called a legacy clause) is a legal provision that exempts existing persons, businesses, or activities from new rules, regulations, or laws. The exemption lets those who were operating under an earlier regime continue to do so without immediately complying with the new requirements….

Gramm-Leach-Bliley Act of 1999 (GLBA) The Gramm-Leach-Bliley Act (GLBA), also called the Financial Services Modernization Act, was enacted in November 1999 to update U.S. financial regulation and modernize the structure of financial services. Its most notable effect was removing restrictions that had prevented commercial banks, investment firms, and insurance companies from affiliating and offering a…

Graham Number: Definition, Formula, Example, and Limitations What it is The Graham number (or Benjamin Graham’s number) is a simple valuation rule that estimates the maximum price a defensive value investor should pay for a stock. It combines a company’s earnings and book value to identify potentially undervalued shares. Key takeaways Created by Benjamin Graham,…

Libel: Meaning, How to Prove It, and How It Differs from Slander Key takeaways Libel is a form of defamation expressed in a permanent or widely disseminated medium (written, printed, broadcast, or online) that harms a person’s reputation. Libel is a civil tort; a successful claim typically requires showing a false, published statement about the…

Liar’s Poker: Rules, Strategy, and the Wall Street Connection What is Liar’s Poker? Liar’s Poker is a bluffing and betting game that became popular among traders. Players use the digits in the serial numbers of U.S. dollar bills (or other bills) to make claims about how many of a particular digit appear across all bills…

Liar Loan: Definition and Risks A liar loan is a mortgage that requires little or no documentation of a borrower’s income or assets. Instead of verifying pay stubs, W-2s, or tax returns, the lender accepts the borrower’s stated information. Because verification is minimal or absent, these loans create opportunities for borrowers or originators to overstate…

Liability Insurance — Overview Liability insurance protects individuals and businesses from third-party claims for bodily injury, property damage, and related legal costs and settlements when the insured is found legally responsible. Unlike other insurance types, liability coverage is designed to compensate injured third parties rather than reimburse the policyholder. It generally does not cover intentional…

Liability-Driven Investment (LDI) Key takeaways LDI is an investment approach focused on generating cash flow to meet specific future obligations (liabilities), such as pension payouts or insurance claims. Common users are pension funds, insurance companies, endowments, and retirees seeking predictable income. LDI emphasizes matching asset cash flows and risk characteristics to liabilities, often using bonds…

Understanding Liabilities: Definitions, Types, and Key Differences From Assets What is a liability? A liability is an obligation a person or company owes to another party, typically involving the transfer of economic benefits such as cash, goods, or services. Liabilities arise from past transactions or events and are recorded on the balance sheet. Common forms…

Levy: What It Is and How It Works Definition A levy is the legal seizure of property or assets to satisfy an unpaid debt. Tax authorities (such as the IRS or state tax agencies) and, after a court judgment, private creditors can use levies to take cash, bank account funds, vehicles, real estate, wages, retirement…

Levered Free Cash Flow (LFCF) Levered Free Cash Flow (LFCF) is the cash a company has left after meeting all operating expenses and mandatory financial obligations, including debt repayments. It represents the cash available to equity holders for dividends, share repurchases, or reinvestment in the business, and is a direct indicator of a company’s ability…

Leveraged recapitalization: overview A leveraged recapitalization (leveraged recap) is a corporate finance transaction in which a company replaces a large portion of equity with debt—typically a mix of senior bank loans and subordinated debt—by borrowing funds to buy back shares or pay a special distribution. The result is a more highly leveraged capital structure. How…

Leveraged Loan Index (LLI) A Leveraged Loan Index (LLI) is a market-weighted benchmark that tracks the performance of institutional leveraged loans. These indexes summarize price movements, spreads, and interest payments of a basket of loans and are used to measure market performance and to underlie investment products. What is a leveraged loan? A leveraged loan…

Leveraged Loans: Definition and Overview A leveraged loan is a high-risk business loan extended to borrowers with substantial existing debt or below‑investment‑grade credit ratings. Because of the elevated default risk, these loans carry higher interest rates and are commonly used to finance mergers and acquisitions, leveraged buyouts (LBOs), recapitalizations, debt refinancing, or other corporate needs….

Leveraged Lease A leveraged lease is a lease arrangement in which the lessor (the party that owns the asset) finances acquisition of the asset using borrowed funds from a third-party lender. The lessee obtains the right to use the asset for a specified period while the lessor (or its lender) retains title. Leveraged leases are…

Leveraged ETFs Leveraged exchange-traded funds (LETFs) are ETFs that use derivatives and debt to amplify the daily returns of an underlying index, sector, commodity, currency, or single stock. Instead of tracking performance 1:1 like a traditional ETF, a leveraged ETF typically targets a multiple (commonly 2x or 3x) of the index’s daily movement — and…

Leveraged Employee Stock Ownership Plan (LESOP) Key takeaways A LESOP is an employee stock ownership plan funded with borrowed money—typically a bank loan that the company repays with annual contributions. It lets a company transfer ownership to employees without large up‑front cash outlays and provides tax-deferral on allocated shares until distribution. Major risks include high…

Understanding Leveraged Buyouts (LBOs) A leveraged buyout (LBO) is an acquisition in which the buyer finances the majority of the purchase with borrowed money, typically secured by the assets and future cash flows of the target company. LBOs enable acquisitions that would otherwise require far more equity capital by shifting repayment risk onto the acquired…

Leveraged Buyback: Definition, How It Works, and Key Implications A leveraged buyback is a corporate finance transaction in which a company repurchases its own shares using borrowed funds. By reducing the number of shares outstanding, the remaining shareholders’ ownership percentages and per-share financial metrics (such as earnings per share) typically rise—even though the company’s underlying…

Leverage Ratio: What It Is, What It Tells You, and How to Calculate Definition A leverage ratio measures how much debt a company, institution, or household carries relative to another financial metric (assets, equity, income, etc.). It shows how operations are financed and how vulnerable those finances are to shocks. Key takeaways Leverage ratios evaluate…

Leverage Financial leverage is the use of borrowed funds to increase the potential return on an investment or project. By taking on debt instead of issuing equity, companies and investors can amplify gains—but they also amplify losses and financial risk. Key takeaways Leverage uses debt or borrowed capital to magnify returns. Common leverage measures include…

Level-Premium Insurance Key takeaways * Level-premium insurance keeps the premium payments the same for the guaranteed length of the policy. * It can apply to term policies (fixed period) or permanent policies (coverage for life). * Permanent policies (e.g., whole life) typically build cash value, which can affect the policy’s overall value; term policies do…

Level Death Benefit: What It Means and How It Works Key takeaways * A level death benefit is a fixed life insurance payout that does not change over the policy term. * It’s available on term and many permanent policies and usually carries lower premiums than increasing-benefit options. * Inflation reduces the real value of…

Key takeaways * Level 3 assets are the most illiquid and hardest to value because they lack observable market prices. * Valuation relies on models and unobservable inputs (“mark to model”), so estimates are subjective and can vary materially. * FASB’s fair-value framework (Topic 820) requires enhanced disclosure and reconciliation for Level 3 holdings to…

Level 2 Assets What they are Level 2 assets occupy the middle tier of the fair-value hierarchy. They are financial instruments that lack direct, quoted market prices but can be valued reliably using observable market data or inputs derived from similar assets. That makes them less transparent than Level 1 assets (which have quoted prices…

Level 1 Assets Level 1 assets are the most liquid and transparent financial instruments. They have readily available, market-based quoted prices and can be valued reliably using observable market data. Typical Level 1 assets include listed stocks, government and corporate bonds traded on active exchanges, and publicly quoted mutual funds or ETFs. How Level 1…

Level III Quote — What It Is and Why It Matters Key takeaways * The U.S. market publishes three quote tiers: Level I, Level II, and Level III. * A Level III quote provides the deepest market information and lets authorized participants enter and update quotes and execute orders. * Level III access is restricted…