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Oesterreichische Nationalbank - Dictionary Category: Economy and Finance Date & country: 04/10/2008, AU Words: 3913

leveraged buyout
A transaction used for taking a public corporation private financed through the use of debt funds: bank loans and bonds. Because of the large amount of debt relative to equity in the new corporation, the bonds are typically rated below investment grade, properly referred to as high-yield bonds or junk bonds. Investors can participate in an L.B.O. t...

leveraged floater
Leveraged floaters are floating rate bonds, whose current interest rate is designed according to a principle directly opposite to reverse floaters: A fixed interest rate is deducted from a variable reference interest rate (e.g. twice LIBOR less 4%). Minimum interest is zero percent....

leveraged loan
Bank loans that are rated below investment grade (BB+ and lower by S&P or Fitch, and Baa1 and lower by Moody`s) to firms with a sizable debt-to-EBITDA ratio, or trade at wide spreads over LIBOR (e.g., more than 150 basis points)....

leveraged loan
Different market organizations and lenders defi ne leveraged loans in different ways; however there are two broad ways to classify loans as leveraged or nonleveraged. The first is based on credit ratings, and the second is based on a loan`s initial interest rate spread over LIBOR. The extent to which a credit is leveraged reflects, other things bei...

leveraged loan
Leveraged loans, which are often defined as credits priced 150 basis points or more over the London interbank offered rate, are essentially loans with a high rate of interest to reflect a higher risk posed by the borrower. High-yield or junk bonds are those that are rated below `investment grade,` i.e. less than triple-B....

leveraged loan
money/financings of less-established companies, loans to highly leveraged companies...

Leviathan approach
Politicians and bureaucrats may be considered a distinct interest group concerned about expanding its size and influence over the economy. Niskanen (1971) and Brennan and Buchanan (1977) suggest that an objective of the government may be to maximize or, on the margin, increase its size and expenditures. This view has been characterized as the levia...

liability base
`liability base` shall be the amount of qualifying liabilities, within the balance sheet of each NCB, specified in accordance with Annex I to this Decision...

liability base
The liability base currently consists almost exclusively of deposit liabilities to credit institutions. Interest paid by NCBs on items within the liability base is deducted and the net income is pooled. At present, minimum reserve requirement deposits, which constitute the bulk of the liability base, are also remunerated by NCBs at the Eurosystem`s...

liability base for monetary income
agreed set of monetary liabilities on which a uniform reference rate of return is applied to calculate the monetary income of a national bank (indirect method)....

LIBOR
The BBA LIBOR is the primary benchmark used by banks, securities houses and investors to fix the cost of borrowing in the money, derivatives and capital markets around the world....

LIBOR
The rate banks charge each other for short-term Eurodollar loans. LIBOR is frequently used as the base for resetting rates on floating-rate securities....

LIC
Low Income Countries - with an annual per capita income of less than US $ 765 in 1995...

lien
A lien is the legal right or claim upon property that attaches to the property until a debt is satisfied, such as a tax lien or mechanic`s lien....

lien
The legal right of a creditor to sell mortgaged assets when the debtor is unable or unwilling to meet requirements of a loan agreement. A lien makes a bondholder`s claim more secure....

lien
The right of one person to retain possession of goods owned by another until the possessor`s claims against the owner have been satisfied. In a general lien, the goods are held as security for all the outstanding debts of the owner, whereas in a particular lien only the claims of the possessor in respect of the goods held must be satisfied. Thus an...

life annuity
An annuity that pays a fixed amount for the lifetime of the annuitant. http://www.marketvolume.com/glossary/l0114.asp (30.05.03)...

life annuity certain
An annuity contract that pays an income benefit for the life of the annuitant with a guarantee that a given number of income payments will be made. If the annuitant dies during the guarantee period, the beneficiary will receive the remaining income payments during the guarantee period. If the annuitant dies after the guaranteed number of payments a...

life expectancy
Eurostat calculates life expectancy as the average further number of years that a person of a specified age can expect to live, assuming that the age-specific mortality levels remain constant (i.e. the rates observed for the period under review). Life expectancy tables are based on the probability of dying according to Farr`s death rate method: qx ...

life expectancy at birth
The average length of life of a birth cohort. As derived from a period life table, it is the average length of life of a newborn baby assuming they experience the age-specific mortality rates of a given period throughout their life. It represents the average longevity of the whole population and does not necessarily reflect the longevity of an indi...

life insurance
Life assurance is a means by which you and I can insure our lives, so that our dependants and other loved ones can be compensated financially when we die. Should an insured person die within the life of the policy, the insurer will be required to make a pay out.There are several types of life insurance (sometimes referred to as life assurance). The...

life insurance policy
A life insurance policy is a legally binding contract between an insurance company and the person who buys the policy, commonly called the `insured` or the `policyholder` on the Individual side. In exchange for payment of a specified sum of money, called the `premium,` the life insurance company agrees to pay the `beneficiary` (or for some benefits...

life-cycle hypothesis
An attempt to explain the way that people split their INCOME between spending and saving, and the way that they borrow. Over their lifetime, a typical person`s income varies by far more than how much they spend. On AVERAGE, young people have low incomes but big spending commitments: on investing in their HUMAN CAPITAL through education and training...

light industry
Light industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented (i.e., most of light industry products are produced for end users rather than as a semi products for use by other industries). Light industry has less environmental impact than heavy industry and is more tolerated in residentia...

limit on bank lending
a monetary policy tool the OeNB used in the 1970s...

limited partnership
A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs)....

line of credit
An arrangement between a bank and a firm that requires the bank to quote an interest rate, typically for a short-term loan, when the firm requests the loan. The bank authorizes the maximum loan amount when setting up the line of credit. Note that lines of credit do not in practical sense commit the bank to lend money because the bank is free to quo...

linear function
A function of the form f(x) = mx + b where m and b are some fixed numbers. The names `m` and `b` are traditional. Functions of this kind are called `linear` because their graphs are straight lines...

linear regression
Regression analysis is a forecasting tool that utilizes the relationship between quantitative variables so that one variable (the dependent variable) can be determined in terms of another (the independent variable). The term linear regression, or simple linear regression, indicates that the value of the dependent variable is estimated on the basis ...

lined coin
Lined (`gefuetterte`) coins: This is a name for coins which have a core of copper or bronze beneath their gold or silver surface. Often these are not forgeries but coins so ordered by the government. They are also known as subaerati and are specially to be found among Roman denarii of the first century AD....

Linguistic Services
comprises English native speakers/translators and language technologists/terminologists - principal: Sarah Ann Croasdale...

liquid assets
Liquid assets are cash and assets which can be quickly turned into cash. Liquidity is the ability of a company to pay its obligations....

liquid fund
In India, many mutual funds have launched quasi- Money Market Funds and these are generally called Liquid Funds. These funds invest in a combination of money market instruments and short-term debt with a large proportion of investment in money market instruments....

liquidator
The Regulation defines a number of concepts, including the `liquidator`, which is taken to mean `any person or body whose function is to administer or liquidate assets of which the debtor has been divested or to supervise the administration of his affairs`....

liquidity
The ease and speed with which an investment can be converted into cash....

liquidity
The ease with which financial instruments can be traded on a market and turned into cash. Markets or instruments are described as being liquid, and having depth or liquidity, if there are enough buyers and sellers to absorb sudden shifts in supply and demand without price distortions. The opposite of illiquid. The term can also be used loosely to d...

liquidity
The proportion of cash or cash equivalents in a company`s assets....

liquidity crunch
A liquidity crunch is a business condition that results in having too little cash and other current assets to be able to pay current liabilities as the liabilities mature. A liquidity crunch is a timing issue: not having enough liquidity can force you to make an emergency borrowing at a less than favorable interest rate....

liquidity management
Management von Kontensalden, mit dem Ziel, Mittel in richtiger Höhe zur richtigen Zeit am richtigen Ort zu haben; Abgrenzung zu `cash management`: Zusammenziehen von Mitteln auf ein einziges Konto zwecks kurzfristiger Veranlagung; Treasury-Funktion...

liquidity needs
The liquidity needs are defined as the average, over the relevant period, of the daily sum of reserve requirements and of all factors other than monetary policy operations of the Eurosystem which affect the banking system`s liquidity (the so-called autonomous factors, e.g. banknotes and government deposits with the Eurosystem; see the box in each i...

liquidity preference
The desire to hold money rather than other forms of wealth, e.g. See stocks and bonds. It can be thought of as stemming from the transactions motive, speculative motive and precautionary motive for holding money, and so will be influenced by the levels of income and wealth, rates of interest, expectations and the institutional features of the econo...

liquidity provider
An entity, typically one with a AAA rating, which agrees to provide financing to cover the funding gap between the payment due date under a guaranteed note and when Ex-Im Bank pays the claim. Liquidity providers are used in many situations but the one above is the one which generally is of interest to Ex-Im Bank....

liquidity ratio
Total dollar value of cash and marketable securities divided by current liabilities. also called liquidity ratio or cash asset ratio....

liquidity ratio
Your current ratio, a comparison of current assets to current liabilities, will be particularly important to you if you`re thinking of borrowing money or getting credit from one of your suppliers. Potential creditors use this ratio to measure a company`s liquidity or ability to pay off short-term debts....

liquidity risk
Liquidity risk is the risk arising from a bank`s inability to meet its obligations when they come due, without incurring unacceptable losses, although the bank may ultimately be able to meet its obligations....

liquidity risk
Liquidity risk may arise when there are changes in asset prices, a badly matched balance sheet, or withdrawal of credit from other financial institutions....

liquidity risk
the risk that a counterparty (or participant in a settlement system) will not settle an obligation for full value when due. Liquidity risk does not imply that a counterparty or participant is insolvent since it may be able to settle the required debit obligations at some unspecified time thereafter....

liquidity risk
The risk that arises from the difficulty of selling an asset. An investment may sometimes need to be sold quickly. Unfortunately, an insufficient secondary market may prevent the liquidation or limit the funds that can be generated from the asset. Some assets are highly liquid and have low liquidity risk (such as stock of a publicly traded company)...

liquidity risk
The risk that funds will not be available at a future date at the rate and/or in the amount required. Also, the risk that a market will not be liquid, ie that it will be difficult to buy or sell an asset without causing a price swing, because of a lack of active trading in that market....

listed company
A company is said to be `listed`, `quoted` or `have a listing` if its shares can be traded on a stock exchange. To be more accurate, it is the securities that are listed, not the company. The phrase `listed company` is widely used to mean a company that has listed shares....

litas
Lithuanian currency...

LLC test
Levin, Lin and Chu test; a panel unit root test...

load chart
a form of Gantt chart that shows both the loading and idle times of a set of machines or departments....

loan agreement
A written contract between a lender and a borrower that sets out the rights and obligations of each party regarding a specified loan....

loan debtor
However, at maturity the calculated value will again have to be identical to the nominal value, reflecting the fact that at this point the bank`s claim on the bond issuer or loan debtor is immediately repayable at nominal (par) value....

loan origination
Loan origination is the process of underwriting and funding a loan....

loan origination
The process by which a mortgage lender obtains a mortgage secured by real property. An origination fee is charged by the lender to process all the forms involved in obtaining a mortgage....

loan portfolio
Active Loan Portfolio: The total amount loaned out less the total amount of repaid loans; i.e., all money that is `on the street` or owed to the institution in the form of loans on the date the report is filed....

loans and advances
Loans and advances to customers shall comprise all types of assets in the form of claims on domestic and foreign customers other than credit institutions, regardless of their actual designations....

loan-to-value ratio
The ratio of the amount borrowed to the appraisal or market value of the underlying collateral, usually taken into consideration in relation to loans used for real estate financing. It indicates the percentage of the appraisal or value of the collateral that the bank is willing to provide as a loan....

local authorities
Public administration whose competence extends only to a local part of the economic territory, excluding local agencies of social security funds....

local loop unbundling
The phrase `local loop unbundling` is used to refer to a regulatory requirement on the incumbent in the telecommunications market (in New Zealand`s case Telecom) to make available to other providers individual components of its network (e.g. the copper wire to consumer premises). This enables other providers to choose the most efficient points at w...

location
`location`: - where an institution is concerned, the Member State where it has its registered office or its main administration; - where a sponsoring undertaking is concerned, the Member State in which it has its registered office or its main administration if that sponsoring undertaking is a legal person, a branch or an agency or the Member State...

location bar
Also known as the `Location bar` in Netscape, the Internet Explorer address bar is a name used to describe the text box used to enter a websites address in a browser. For example the address `...

lockstep system
lockstep = a rigidly inflexible pattern or process...

lockup
Lockups are agreements set by investment banks to protect young stocks from heavy insider selling. They typically bar company insiders, venture capitalists and other early investors from selling stock for periods ranging from three months to more than a year after the initial public offering....

lognormal distribution
A distribution where the logarithm of the variable follows a normal distribution. Lognormal distributions are used to describe returns calculated over periods of a year or more....

London Interbank Offered Rate
The BBA LIBOR is the most widely used benchmark or reference rate for short term interest rates. LIBOR stands for the London Interbank Offered Rate and is the rate of interest at which banks borrow funds from other banks, in marketable size, in the London interbank market....

London interbank offered rate
The rate of interest at which funds are offered in the London interbank market, for maturities ranging from overnight to five years. Three and six-month Libor are widely used as reference rates for payments on floating rate loans....

long
One who has bought futures contracts or owns a cash commodity....

long hedge
Buying futures contracts to protect against a possible price increase of cash commodities that will be purchased in the future. At the time the cash commodities are bought, the open futures position is closed by selling an equal number and type of futures contracts as those that were initially purchased....

long position
a condition that the buyer or holder of securities owns more securities than it contracts to deliver....

long position
A position wherein an investor`s interest in a particular series of options is as a net holder (i.e., the number of contracts bought exceeds the number of contracts sold)....

long position
For the purposes of paragraph 4 of Annex I, long position shall mean a position in which an institution has fixed the interest rate it will receive at some time in the future, and short position shall mean a position in which it has fixed the interest rate it will pay at some time in the future. 93/6/EEC...

longer-term refinancing operation
A regular open market operation to be executed by the ESCB in the form of a reverse transaction. Longer-term refinancing operaqtions are executed through monthly standard tenders and have a maturity of three months....

longitudinal data
Data in which many units are observed over multiple time periods. The Bureau of Labor Statistics` National Longitudinal Surveys (NLS) program collects data from a particular age group of people over many years on an annual or biennial basis. The panel data track the same sample of individuals over many time periods....

long-term care
A general term that describes a range of medical, nursing, custodial, social, and community services designed to help people with chronic health impairments or forms of dementia...

long-term care
In acute care, physicians, nurses, and insurance companies choose and deliver treatment. Long-term care concentrates on helping individuals to function as well as possible; it demands intense involvement by family members, particularly wives and adult daughters, as providers and decision-makers. Families are often equal beneficiaries of long-term c...

long-term care benefit
Long-term Care Benefit is a weekly benefit which is paid towards the cost of the fees if you are in a private residential or private nursing home. `Private ` means not run by the States....

long-term loan
The sub-category long-term loans (F.42) consists of all transactions in long-term loans (AF.42) that is loans with a long-term original maturity (Long-term financial assets (liabilities) are financial assets (liabilities) whose original maturity is normally more than one year, and in exceptional cases more than two years at the minimum)....

loss loans
Loans classified as loss loans are considered uncollectible and shall be listed at 100 percent potential loss....

loss-sharing agreement
an agreement among participants in a clearing or settlement system regarding the allocation of any losses arising from the default of a participant in the system or of the system itself....

loss-sharing arrangement
An agreement between participants in a transfer system or a clearing house arrangement regarding the allocation of any loss arising when one or more participants fail to fulfil their obligations; the arrangement stipulates how the loss will be shared among the parties concerned in the event that the agreement is activated....

loss-sharing rule
an agreement between participants in a transfer system or clearing house arrangement regarding the allocation of any loss arising when one or more participants fail to fulfil their obligation: the arrangement stipulates how the loss will be shared among the parties concerned in the event that the agreement is activated....

low default portfolio
...so-called low-default portfolios (LDPs) are not mentioned as such in the Basel II Framework. ... the Basel Committee Accord Implementation Group`s Validation Subgroup (AIGV) believes that there is a continuum between low default and non-low-default. A portfolio is closer to the LDP end of this continuum when a bank`s internal data systems includ...

low default portfolio
Low default portfolios (LDPs) is not a term defined in the draft CRD (or Basel). However, it can broadly be taken to mean exposures for which a firm is unable to validate its estimates of PD, LGD and EAD to a proven level of statistical significance based on its internal default experience....

lower middle income country
Lower Middle Income Countries, with an annual per capita income of between US $766 and US $3035 in 1995...

Lucas Critique
The Lucas Critique says that it`s naive to try to predict the effect of a policy experiment based on correlations in historical data. Fort Knox has never been robbed, but that doesn`t mean we can safely eliminate the guards. If we do want to predict the effect of a policy experiment, we must model the `deep parameters` (preferences and constraints)...

luster
The sheen or bloom on the surface of an uncirculated coin resulting from the centrifugal flow of metal caused by striking....

Luxembourg Compromise
This document, which is a declaration with no legal value, expresses the wish that where proposals are of a particularly delicate nature (of `particular importance`) the Commission will contact the governments of the Member States before drafting begins, but it does add that such consultation must not affect the Commission`s right of initiative....

Luxembourg Wealth Study
... obvious ...that wealth comparability was lagging far behind income comparability (data are available for fewer countries, data collection procedures differ widely and the very same definitions of the wealth components are far from being homogeneous across nations). A meeting was called to discuss the feasibility of developing the Luxembourg Wea...

Maastricht Treaty
Maastricht Treaty: Treaty signed in Maastricht, the Netherlands in February 1992, more formally entitled Treaty on European Union. The Maastricht Treaty was simply a large package of amendments to the Treaty of Rome, with the effect of creating the European Union, out of the European Community; it plotted the path towards European Monetary Union; i...

MAC
Message Authentication Code: a hash algorithm parameterised with a key to generate a number which is attached to the message and is used to authenticate it and to guarantee the integrity of the data transmitted....

Macaulay duration
In 1938 Frederick Macaulay devised a measure which is used as an approximation for computing the mean maturity of a fixed-interest bond. This indicator, whose unit is time (year mostly), is therefore also referred to as Macaulay duration and corresponds to a weighted average of the maturities of all payments resulting from the bond....

machinery and equipment
Transport equipment and other machinery and equipment, as defined below other than that acquired by households for final consumption. Tools that are relatively inexpensive and purchased at a relatively steady rate, such as hand tools, may be excluded. Also excluded is machinery and equipment integral to buildings that is included in dwellings and n...

macrodata
Statistical macrodata: An observation data gained by a purposeful aggregation of statistical microdata conforming to statistical methodology....

macroeconomic policy
Government actions designed to affect the performance of the economy as a whole....

macroeconomic volatility
Macroeconomic volatility refers to the degree of fluctuation in output, employment, inflation and other indicators that an economy might experience over time. The UK economy has proved somewhat volatile over the last twenty years. Measures would include the standard deviation in real GDP growth, exchange rate changes, consumer price inflation and s...

mad cow disease
brain-wasting disease...

Maestro card
Maestro is the debit card from MasterCard. It provides PIN-based, direct cash access from your bank account at home as well as abroad....