Page 104 - PRIAA Glossary

LOAN PARTICIPATION NOTE (LPN)
A fixed income security that is backed by a pool of loans, or portions of loans. LPNs are typically issued by banks to manage the credit risk associated with their lending activities.
LOG-NORMAL DISTRIBUTION
A continuous probability distribution. For a log-normal distribution, the logarithm of random variable x is normally distributed. Log-normal distributions are widely used in mathematical finance to describe the movement of random variables, such as stock prices, in options pricing models such as Black Scholes. Implied volatilities for European options are typically quoted as log-normal volatilities.
LONDON INTERBANK OFFERED RATE (LIBOR)
The average interest rate estimated by leading banks in London that they would charge when borrowing from other banks. The LIBOR is derived from a filtered average of the world’s most creditworthy banks’ interbank deposit rates for larger loans with maturities between overnight and one full year.
LONG FORM
A confirmation that deems a master agreement to be in place between parties and incorporates the terms of a master agreement by reference. Since the inception of master confirmation agreements (MCAs), this term has also been used to refer to the MCA, which incorporates a set of ISDA market definitions.
LONG RANGE PRODUCT CARRIER (LR1)
A product tanker with the maximum dimensions for passing through the Panama Canal, of approximately 50,000 dwt to 80,000 dwt. These tankers are also commonly referred to as panamaxs and carry clean or dirty petroleum products.
LONGEVITY SWAP
A swap meant to offset the risk primarily to pension funds of a population living longer than expected. A pension fund would pay a fixed amount up to a certain year, whereafter
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