Legal List, or Legal Investment: A list of securities in which certain institutions and fiduciaries, such as insurance companies and banks, may invest. For the protection of depositors or liability holders, legal lists are restricted by regulatory agencies to high-quality securities that meet certain specifications. Also known as legals. See Prudent Man Rule.
Legal Opinion: An opinion concerning the validity of a municipal issue with respect to statutory authority, constitutionality, procedural conformity, and usually the exemption of interest from federal income taxes. The legal opinion is usually rendered by a law firm recognized as specializing in public borrowings, often referred to as “bond counsel.”
Limited Order: An order to buy or sell a certain amount of a security at a minimum price within a specific period of time.
Limited-Tax Bond: A bond guaranteed by a special tax or taxes, or by a specified portion of the real estate tax. The rate and amount of such a bond is limited.
Liquidity: The ease at which a security can be bought or sold (converted to cash) in the market. A large number of buyers and sellers and a high volume of trading activity are important components of liquidity.
Listed Securities: Securities that have been admitted for trading on a recognized securities exchange. Unlisted securities are usually sold over the counter.
Locked Market: A securities market in which the bid price is the same as the asked price.
London Interbank Offered Rate (LIBOR): The interest rate on Eurodollar deposits traded between banks. The rate depends on the maturity of the deposit as well as on which bank quotes the rate.
Long: Owning more securities than one has contracted to deliver.