Log Normal Distribution

A random variable X is log‑normally distributed if its natural logarithm Y = ln(X) is normally distributed. Equivalently: – ln(X) ~ N(μ, σ^2) –…

Locked In

Key takeaways – “Locked in” means you cannot—or should not—sell or transfer a security because of regulatory, contractual, or tax reasons (or you choose…

Model Risk

Model risk is the risk that a quantitative model gives incorrect, incomplete, or misleading outputs — and that those outputs lead decision‑makers to take…

Loan Stock

• Loan stock, in the context used here, refers to equity (common or preferred) that is pledged or used as collateral to secure a…

Loan Loss Provision

Key takeaways – A loan loss provision is an expense banks record to build (or adjust) a reserve that covers expected loan defaults and…

Loan Note

A loan note (a form of promissory note) is a written promise by one party (the borrower/payee) to repay money to another party (the…

Liquid Market

A liquid market is one in which assets can be bought or sold quickly, in large size, and with little change in price. Liquidity…

Lintner Model

The Lintner model (John Lintner, 1956) is a simple, influential framework for understanding how companies set and change cash dividends over time. Lintner showed—based…

Liquid Alternatives

Liquid alternative investments (or “liquid alts”) are mutual funds and exchange-traded funds (ETFs) that try to deliver the risk‑management or return-enhancement characteristics of traditional…

Lease Payments

• A lease payment is the periodic (often monthly) amount a lessee pays a lessor for the right to use an asset for a…