Large Cap - Normal Market Size

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Large Cap: See Market Capitalisation.

Leverage: The US term for gearing.

LIFFE: This is not a typographical error but the name of the futures market in London. It (nearly) stands for "London International Financial Futures and Options Exchange". See Futures.

Life Insurance: See Term Life Insurance and Whole of Life Insurance. (By the way, life insurance means the same as life assurance. It is just that life assurance lasts until your death, which is a guaranteed event. Life insurance is for a defined period that might, if you are lucky, not include your death.)

Like-for-Like: A performance measure, most often used in the retail trade, to measure the underlying growth in the business, by eliminating growth arising from the opening of new outlets or closure of old ones. It can also be used to strip out the effect of acquisitions or disposals.

Limit Order: When you place an order with a broker to buy or sell a share you can either instruct them to deal at the best order they can (known as "at best"). Alternatively you can place a limit order to buy or sell only if you can get a certain price.

Listed Company: A Public Limited Company (plc), listed on a Stock Exchange.

Liquidity: The easier it is to turn an asset into cash, the more liquid it is. Shares are very liquid as they can be sold any weekday at any brokerage. Works of art and homes are not nearly as liquid because you need to find an interested buyer. Since every buyer needs a seller and vice versa, penny shares, which are very thinly traded, are more illiquid than larger capitalisation shares.

Loan Note: A fancy financial term for an IOU. It is a transferable debt that can be sold by the lender.

London Inter Bank Offer Rate (LIBOR): The rate at which big banks lend to each other.

London Stock Exchange: Where the action happens. The London Stock Exchange is located in the City and is not only by far the most significant stock exchange in the UK, but the largest in Europe. See Alternative Investment Market.

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Margin: 1. Borrowing money to use specifically for buying securities of any kind in a brokerage account. 2. A measure of profitability of a company, like profit margin, operating margin or gross margin.

Market Capitalisation: The total market value of all of a firm's outstanding shares. Market capitalisation is calculated by multiplying a firm's share price by the number of shares outstanding. Large cap, medium cap, small cap refer to shares in decreasing order of market capitalisation.

Market Maker: Someone who undertakes to always make a two-way price in a share. In other words at all times they will display a price at which they are prepared to buy and a price they are prepared to sell. In reality they reflect underlying demand for the shares and are not at liberty to simply make whatever price they like.

Medium Cap: See Market capitalisation.

Message Board: Invaluable means of exchanging information and ideas with other investors on the Internet. Remember, though, make all investment decisions on the basis of your own research, not someone else's tip.

Minorities: Profits due to the outside shareholders of a subsidiary company. It is also that element of a company's balance sheet that is funded by outside equity interests.

MIG: Mortgage Indemnity Guarantee. If you borrow more than 75% of the value of your house, you'll probably get stung with one of these. It insures the lender against you being unable to pay. Even though it's you that pays this premium, it still won't stop you ending up at the Salvation Army soup kitchen.

Mis-Selling: Selling a financial product to a customer which is not in their best interests. Mis-Selling happens because of the commission-based payment structure under which Independent Financial Advisers operate.

Monetary Policy Committee (MPC): The division of the Bank of England that meets at the start of each month to decide what to do with interest rates.

Money Purchase Scheme: Pension schemes where you build up a pot of cash, out of which your pension will be generated, also known as a defined contribution scheme. Personal Pension Plans and AVCs work on this kind of system, as do an increasing number of occupational pension schemes. This pot of cash has to be used to buy an annuity.

Mortgage: A loan to buy a home, where you put up the property as a security against you paying back the loan. Mortgages offer by far the best long-term interest rates of any loan because they are the least risky of loans. (You can't make off with your house, no?)

Mutual Fund: The US equivalent to our unit trust.

Mutual Society: An organisation set up and owned by its members and run for their benefit. Building societies, friendly societies and some life insurers are examples of mutual societies. See Demutualisation.

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Nasdaq National Market: A national US stock market where trades are made exclusively via computers. The second largest market in the country, the Nasdaq is home to many high-tech and newer firms, including Microsoft. It now has its own website for UK investors: http://www.nasdaq.co.uk

Negative Equity: Bought a house for £80,000 and now it's only worth £60,000? Bad luck - that's £20K of negative equity you're sitting on there. See Gearing.

Net Asset Value: Also known as Shareholder's Funds. This is the sum of all a company's assets less all its liabilities. In principle it is the money that would be left if a company sold all its assets and paid all its debts. An investment trust regularly publishes its Net Asset Value in order to demonstrate the latest value of its investments.

Net Profit: Usually enough to support the Chairman's gross habits. What's left for the shareholder after everyone else has taken their cut.

New Issue: The first time a company is floated on the stock market. Selling your company, or a part of it, to outside investors is a way to raise money for expansion plans. Also known as an Initial Public Offering, or IPO.

New York Stock Exchange (NYSE): The largest and oldest stock exchange in the United States, this Wall Street haunt is the one frequently featured on television, with hundreds of traders on the floor staring up at screens and answering phones, ready to trade stocks upon command from their firms.

Nil Paid: Shares on which no payment has yet been made but which are being dealt in on a stockmarket. These shares usually arise from a new issue or a rights issue. Because the price at which a rights issue is made is at a discount to the market price of the existing shares, the rights issue shares have a value in their own right.

Nominee Account: A type of account in which execution-only stockbrokers tend to hold shares belonging to clients, to make buying and selling of those shares easier. Among other things, though, it does mean that any shareholder perks are unlikely to be enjoyed by the investor.

Normal Market Size: This is maximum number of shares in a company that a market maker is obliged to deal in at the prices that they are quoting.