Liability Definition

A liability is a financial obligation or debt owed by an individual or company to another party.

What is a Liability?

Liabilities can be short-term, such as accounts payable, or long-term, such as bonds or loans.

They are recorded on a balance sheet alongside assets and equity.

A company's outstanding bank loan is recorded as a liability on its balance sheet.

Leverage allows traders to control a larger position size using a smaller amount of capital.

LIBOR, the London Interbank Offered Rate, was a benchmark interest rate at which major banks historically lent to one another.

A limit order is an instruction to buy or sell an asset at a specified price or better.