See: Annuity; Back-End Load; Front-End Load; Investment Company; Load Mutual Fund; Mutual Fund; No Load Mutual Fund; Redemption

Load Mutual Fund
Mutual fund that charges a fee when investors make purchases. This fee (or "load" as it is called) is used primarily to compensate salespeople selling the fund.

See: Back-End Load; Front-End Load; Investment Company; Load; Mutual Fund; No Load Mutual Fund

Load Spread Option
Process used to allocate a contractual mutual fund's annual sales charge. In a contractual plan, fund shares are accumulated through periodic fixed payments. The maximum sales charge is limited to 9% for the life of the contract. However, up to 20% of any year's investment can be credited against the sales charge as long as the total charge for the first four years does not exceed 64% of one year's investment.

See: Load; Mutual Fund

Loan
Transaction whereby an owner of property (lender) grants another party (borrower) to use the property for a specified length of time. The borrower promises to return the property and to pay a fee (interest) for its use. When the property is cash, the borrower signs a promissory note. A loan may be secured with collateral or unsecured.

See: Collateral; Obligator; Unsecured Debt

Loan Consent Agreement
An agreement that is signed by a brokerage client as part of a their margin account documentation. By signing the agreement, the client agrees the broker-dealer may lend the securities.

See: Margin Account; Selling Short

Loan Value
The maximum amount of credit that a lender may lend against collateral. For example, at 50% of appraised value, a piece of property worth $500,000 has a loan value of $250,000.

With respect to the brokerage industry, Regulation T of the Federal Reserve Board stipulates the maximum percentage of eligible securities that a brokerage firm may lend to a margin account client.

See: Collateral; Federal Reserve Board; Margin Account; Regulation T

Lock Box
1: Process whereby a firm's customers mail payments to a post office box. The bank collects the checks from the lock box and deposits them into the firm's account. The company is then notified of the deposits either by telephone or electronically.

2: Service provided by a bank in which they hold a customer's securities and deposit any income or dividends received.

See: Box

Locked In
1: Lingo used to indicate that a rate of return on an investment has been guaranteed for a specific length of time. Examples of such investments are certificate of deposits (CDs) and fixed rate bonds.

See: Certificate Of Deposit; Fixed Income Investment; Rate Of Return

2: Said of a security whose profits or yields have been secured through use of a hedge.

See: Hedging; Yield

3: Said about an investor who does not sell a profitable security because the profit would immediately be subject to capital gains tax.

See: Capital Gain

Locked Market
A situation that occurs in a highly competitive market in which a security's bid and ask prices are the same. Once more buyers and sellers submit their orders, the market will unlock.

See: Asked Price

LOI (Letter Of Intent)
1: A contract signed by a mutual fund shareholder that indicates that the shareholder intends to invest at least a certain amount of money, during a 13-month period, to qualify for a reduced percentage sales charge. A letter of intent may be backdated a maximum of 90 days. Any shares, bought before the letter of intent was signed and within the 90 days, will be adjusted to reflect the reduced sales charge.

See: Breakpoint; Mutual Fund

2: A letter of intent may also refer to a preliminary contract between two parties negotiating a merger or an acquisition.

See: Acquisition; Merger; Takeover

Long
Brokerage lingo signifying that an investor has ownership of a security. Ownership rights entitle the investor to receive any income and dividends paid by the security and, once sold, to profit or to lose money. The owner also may transfer ownership of the security by sale or by gift.

See: Long Position; Short Position

Long Bond
A bond maturing in 10 or more years. Because an investor's money is tied up for a long time, the bonds are riskier than shorter term bonds of the same quality. Thus, they usually pay a higher yield.

See: Bond; Long Term Debt; Maturity Date; Risk/Reward Ratio; Short Term Debt; Yield

Long Coupon
The first interest payment on a bond that represents interest for more than six months. A long coupon occurs when a bond's issuance date is more than six months before the first scheduled payment. A short coupon is interest covering less than six months.

See: Coupon; Interest

Long Hedge
An option or futures contract that is bought to protect against an investment risk. For example, if interest rates are expected to decline, a call option will be bought to lock in a fixed income security's present yield.

See: Fixed Income Investment; Futures Contract; Hedging; Interest; Options; Risk; Yield

Long Leg
The long part of an option spread (the buying and selling of options within the same class at the same time). In other words, the part of the spread that is bought as opposed to written (sold). For example, if a spread is composed of a long call option and a short call option, the long call is the long leg.

See: Call Option; Class Of Option; Leg; Long Position; Option Spread; Put Option; Short Position

Long Market Value
The dollar value of the long positions within an investor's brokerage account.

See: Long Position; Short Market Value

Long Position
Securities owned by an investor that are held in a brokerage account.

See: Current Market Value; Long; Long Market Value; Short Position

Long Term
1: Referring to bonds--a bond with a maturity of ten years or longer.

2: Referring to stocks--a stock which is held for a year or more by an investor.

See: Intermediate Term; Maturity Date; Short Term

Long Term Debt
Liabilities that are due to be repaid after more than one year. This is inclusive of bonds and long-term loans.

See: Bond; Liability; Loan; Medium Term Bond; Short Term Debt

Low
The lowest price per share for a security during a period of time. When talking about a security's low, it may be in regards to the "day's low", the "annual low" or the "historical low". The day's low is the lowest price that a security reached during the current day's trading session. An annual low is the security's lowest price over the past 52 weeks. The historical low represents the security's lowest price since the security came into existence.

See: Highs; Historical Trading Range

Low-load

See: Load Mutual Fund

Lump-Sum Distribution
A single payment of all funds to an owner of such accounts like an IRA, a pension plan or a profit sharing plan.