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Glossary content provided by Financial
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jumbo loan
A loan that is larger than the limits set for conventional
loans by the Federal National Mortgage Association (FNMA)
or Federal Home Loan Mortgage Corportation (FHLMC). This limit
is currently set at $300,700.
junk bonds
A bond that pays an unusually higher rate of return to compensate
for a low credit rating.
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keogh
A Keogh is a tax deferred retirement plan for self-employed
individuals and employees of unincorporated businesses. A
Keogh plan is similar to an IRA but with significantly higher
contribution limits.
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leverage
Using "leverage" is the process of investing using
borrowed funds. Leveraging your investments magnifies your
returns, both positive and negative.
leveraged buyout (lbo)
Leveraged buyouts are deals in which a company is bought with
mostly borrowed money, money frequently raised through selling
high-yield and high-risk junk bonds.
liability risk
The risk that the legal system may assess punitive damages
against you if property damage or personal injuries can be
attributed to your carelessness or negligence.
lien
A lien represents a claim against a property or asset for
the payment of a debt. Examples include a mortgage, a tax
lien, a court judgment, etc.
life expectancy
Life expectancy represents the average future time an individual
can expect to live. Life expectancies have been increasing
steadily over the past century and may continue to increase
in the future. As people are living longer the cost of retirement
is increasing.
life insurance
A contract between you and a life insurance company that specifies
that the insurer will provide either a stated sum or a periodic
income to your designated beneficiaries upon your death.
life settlement
Occurs when a person who does not have a terminal or chronic
illness sells his/her life insurance policy to a third party
for an amount that is less than the full amount of the death
benefit. The buyer becomes the new owner and/or beneficiary
of the life insurance policy, pays all future premiums, and
collects the entire death benefit when the the insured dies.
Some states regulate the purchase as a security while others
may regulate it as insurance.
liquidity
Liquidity is the measure of your ability to immediately turn
assets into cash without penalty or risk of loss. Examples
include a savings account, money market account, checking
account, etc.
living will
If you become incapacitated this document will preserve your
wishes and act as your voice in medical decisions, if you
are unable to speak for yourself as a result of medical reasons.
loan-to-value ratio
A loan-to-value ratio represents the relationship between
all outstanding and proposed loans on a property and the appraised
value of the property. For example, an $80,000 loan on a $100,000
property would represent an 80% loan-to-value ratio. This
ratio assists a lender in determining the risk associated
with the loan. The higher this ratio, the riskier the loan.
long position
A long position in an investment indicates a current ownership
in that investment which would increase in value as the underlying
asset(s) increase in value, opposite of a short position.
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Glossary content provided by Financial
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