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Market Psychology & Behavioural Finance

Loss Aversion

The tendency to feel the pain of a loss more strongly than the pleasure of an equivalent gain.

Test: the compensation demanded to accept a possible loss exceeds the loss's size, typically by a factor near two ratio (x, times)
Derivatives, Futures & Options

Lot Size

The fixed number of units of the underlying that one derivative contract represents.

Contract Value = Lot Size x Price of the Underlying shares
Orders, Execution & Market Structure

Lower Circuit

The state in which a security is trading at the bottom of its permitted price band, with sell orders pending and no buyers.

Lower Circuit Price = Previous Close x (1 - Band %)
Funds, ETFs & Index Investing

Lump Sum Investment

Investing an entire amount at one time rather than spreading it across instalments.

Future Value = Amount x (1 + Annual Return) raised to the number of years