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Long-Term Capital Gain or Loss Definition A long-term capital gain or loss is the profit or loss from the sale of an asset that you held for more than 12 months. Assets held 12 months or less generate short-term gains or losses. Long-term gains generally receive more favorable tax treatment than short-term gains; capital losses…

Long-Term Assets Key takeaways * Long-term (non-current) assets provide economic benefit for more than one year. * They include tangible assets (property, plant, equipment) and intangible assets (patents, trademarks, goodwill). * Changes in long-term assets may signal capital investment or asset liquidation. * Depreciation (and amortization for intangibles) allocates the cost of long-term assets over…

Long-Tail Liability: Definition, How It Works, and Examples What is long-tail liability? A long-tail liability is a liability that takes a long time to surface and settle. Claims may be filed years or even decades after the event that gave rise to the claim, producing a high level of incurred-but-not-reported (IBNR) losses for insurers and…

Long/Short Funds A long/short fund is an investment vehicle—structured as a mutual fund, hedge fund, or ETF—that holds both long positions (buying securities expected to rise) and short positions (selling borrowed securities expected to fall). By profiting from both undervalued and overvalued securities, these funds aim to exploit market inefficiencies and manage risk more actively…

Long–Short Equity Long–short equity is an investment strategy that seeks profit from both rising and falling stock prices by holding long positions in stocks expected to appreciate and short positions in stocks expected to decline. It’s commonly used by hedge funds and other active managers to reduce market exposure, exploit relative mispricings, and aim for…

Long-Run Average Total Cost (LRATC) What it is Long-Run Average Total Cost (LRATC) is the average cost per unit of output when all inputs are variable and firms can adjust their scale of production. Formally: LRATC = Long-Run Total Cost (LTC) / Quantity (Q) The LRATC curve shows the lowest possible average cost of producing…

Long-Legged Doji: Definition, Significance, and How to Trade Key takeaways A long-legged doji is a candlestick with long upper and lower shadows and a very small real body (open ≈ close). It signals indecision between buyers and sellers and can foreshadow consolidation or a trend reversal. The pattern is more meaningful after a strong advance…

Long Term in Investing Key takeaways * “Long term” generally means holding an asset for more than one year; for many individual investors it often implies a horizon of 7–10 years or longer. * Tax treatment differs by holding period: assets held more than one year qualify for long-term capital gains tax rates, while those…

Long Tail: Definition and Business Strategy What is the long tail? The long tail is a business strategy that focuses on selling a large number of niche, low-demand items to many customers rather than concentrating only on a small number of high-volume hits. Individually these items sell in low volumes, but collectively they can rival…

Synthetic Put (Synthetic Long Put): What It Is and How It Works Overview A synthetic put is an options strategy that replicates a long put by combining a short position in the underlying stock with a long call option on the same stock. Also called a synthetic long put, married call, or protective call, it…

Long Straddle Options: Strategy, Risks, and Examples Overview A long straddle is an options strategy that profits from large moves in an underlying asset in either direction. It involves buying a call and a put with the same strike price and the same expiration date—typically at‑the‑money. The position benefits when price movement or implied volatility…

Long Run in Economics Definition The long run describes an economic situation in which all factors of production and costs are variable. Firms can adjust inputs (capital, labor, materials, equipment), change production capacity, and enter or exit the industry. The long run is a theoretical horizon that allows full adjustment to changes in supply, demand,…

Long Put Options: Definition, Examples, and Comparison With Shorting Stock What is a long put? A long put is an options strategy where an investor buys a put option, giving the buyer the right (but not the obligation) to sell the underlying asset at a specified strike price before or at expiration. Investors use long…

Long Position (Long) Definition A long position is owning an asset or a contract with the expectation that its value will rise (or, in some contract forms, to secure the right to transact at a specified price). It is the opposite of a short position. Key takeaways Going long typically means buying and holding an…

Long Jelly Roll A long jelly roll is an options arbitrage strategy that seeks to profit from price differences between two horizontal (calendar) spreads at the same strike: a call calendar spread and a put calendar spread. The strategy is market‑neutral and aims to capture the small pricing gap that, in theory, should reflect only…

Long Hedge: What it is and how it works A long hedge is a risk-management strategy in which a buyer takes a long position in futures contracts to lock in a future purchase price for a commodity or raw material. It protects buyers against rising prices by offsetting higher physical costs with gains on futures…

London Stock Exchange (LSE): Definition, History, and Major Events Definition and overview The London Stock Exchange (LSE) is the United Kingdom’s primary stock exchange and one of the world’s oldest and largest trading venues. It provides electronic equities trading and access to deep, liquid pools of capital and is home to thousands of companies from…

What Is the London Metal Exchange (LME)? The London Metal Exchange (LME) is a major commodities exchange specializing in futures and options contracts for metals. It is widely used to hedge metal price risk and to discover benchmark global prices for base metals such as aluminum, copper, zinc, lead and nickel; it also facilitates trading…

London InterBank Offered Rate (LIBOR) Overview LIBOR (London InterBank Offered Rate) was the leading benchmark for short-term interbank lending rates worldwide. It represented the rates at which major banks said they could borrow unsecured funds from one another across several currencies and maturities. Due to manipulation scandals and methodological weaknesses, LIBOR was phased out—officially replaced…

Logistics: What It Means and How Businesses Use It Key takeaways * Logistics manages how resources are acquired, stored, moved, and delivered. * Effective logistics ensures the right quantities reach the right place at the right time and condition. * Strong logistics reduce costs, improve service, and can create a competitive advantage. What is logistics?…

Logarithmic Price Scale A logarithmic (log) price scale plots price changes by percentage rather than by absolute dollar amounts. On a log scale, equal percentage moves occupy equal vertical distance, which makes large multi‑year gains or losses easier to interpret visually. Key takeaways Log scales represent equal percentage changes with equal vertical spacing. They’re useful…

Log-Normal Distribution What it is A log-normal distribution describes a positive-valued variable whose natural logarithm is normally distributed. If Y is normally distributed with mean μ and variance σ² (Y ~ N(μ, σ²)), then X = e^Y follows a log-normal distribution. Log-normal variables cannot be negative and typically exhibit positive skew (a long right tail)….

Locked-In Retirement Account (LIRA) Key takeaways * A LIRA is a Canadian registered pension account that holds money transferred from an employer-sponsored pension plan and generally prevents cash withdrawals before retirement. * Funds grow tax-deferred and cannot accept new contributions; they can only be funded by transfers from a pension plan. * At retirement, LIRA…

Locked In: What it Means, How It Works, and Why It Happens Locked in describes a situation in which an investor is unwilling or unable to trade a security because regulations, taxes, penalties, or contractual restrictions make selling impractical or costly. Being locked in reduces liquidity and can affect tax outcomes, risk exposure, and financial…

Lockbox Banking: What It Is and How It Works Lockbox banking is a service banks provide to businesses to collect, process, and deposit customer payments sent to a designated post office box. The bank retrieves mailed payments, scans remittance information, posts receipts to the business’s accounts receivable, and deposits funds—often faster than in-house processing. The…

Lock-Up Periods: Definition, Purpose, and Effects A lock-up period is a predefined timeframe during which certain shareholders are restricted from selling or transferring their shares. Common in IPOs and some investment funds (notably hedge funds), lock-ups are designed to support market stability, manage liquidity, and align insiders’ incentives with a company’s longer-term performance. Once the…

Lock-Up Agreement What it is A lock-up agreement is a contractual restriction that prevents company insiders—such as executives, employees, and early investors—from selling their shares for a specified period after an initial public offering (IPO). Underwriters commonly require these agreements to limit selling pressure in the early months of public trading. Key takeaways Temporarily bars…

Lock In Profits Definition Locking in profits means converting unrealized (paper) gains into realized gains by selling all or part of a position. By doing so, an investor reduces exposure to subsequent price moves in the underlying security. Why investors lock in profits Reduce risk and protect capital after a favorable move. Preserve portfolio allocation…

Understanding Local Taxes: Purpose and Impact Local taxes are levied by states, counties, and municipalities to fund community services and infrastructure. They directly support schools, public safety, roads, libraries, parks, and health and transit services. Because benefits are visible locally, municipal budgeting involves trade-offs: higher taxes can finance better services, while lower taxes may require…

Understanding Lobbying What is a lobby? A lobby (or lobbying) refers to organized efforts by individuals, groups, or businesses to influence government officials and legislation in ways that benefit their interests. Lobbying can involve direct contact with lawmakers or indirect efforts to shape public opinion and mobilize voters. Key takeaways Lobbies seek to shape government…

Loan-to-Value (LTV): What It Is and How It Works Key takeaways * LTV measures the size of a loan relative to the appraised value of the property: LTV = (loan amount ÷ property value) × 100%. * Lower LTVs reduce lender risk and typically result in better interest rates and fewer insurance requirements. * Many…

Loan-to-Deposit Ratio (LDR) Key takeaways * The loan-to-deposit ratio (LDR) compares a bank’s total loans to its total deposits and is used to assess liquidity. * LDR = Total Loans / Total Deposits (expressed as a percentage). * A higher LDR suggests more aggressive lending (higher profit potential but greater liquidity risk); a lower LDR…

Loan-to-Cost Ratio (LTC) Definition The loan-to-cost (LTC) ratio measures the portion of a commercial construction project’s cost that is financed by debt. It compares the loan amount to the total hard construction costs and is commonly used by lenders and developers to assess financing risk and required developer equity. Formula LTC = Loan Amount ÷…

Loan Syndication What is loan syndication? Loan syndication is the process where multiple lenders join together to provide a single, large loan to one borrower. Each lender contributes a portion of the total amount and is liable only for its share. Syndication is commonly used for large corporate financings—acquisitions, mergers, buyouts, major construction or development…

Loan Stock Explained Overview Loan stock is an arrangement in which shares (common or preferred) are used as collateral to secure a loan. Functionally it resembles a traditional loan—borrower receives cash and pays fixed interest—but the lender holds equity as security. Loan-stock arrangements can be secured or unsecured and may include convertible features. How it…