Lemon

AAA

DEFINITION of 'Lemon'

A very disappointing investment. A lemon is an investment in which your expected return wasn't even close to being achieved, and more than likely ended up losing you some or all of the capital committed. Lemon investments can be associated with poor money management, economic factors, financial fraud or just plain bad luck.

INVESTOPEDIA EXPLAINS 'Lemon'

The most common and well-known example of a lemon is in the used car industry, where defective or poorly conditioned vehicles that are bought and sold by the purchaser without prior knowledge of the true state of the vehicle. There are, however, regulations in the U.S. that attempt to protect consumers in the event that they purchase a defective vehicle, known as Lemon Laws.

RELATED TERMS
  1. Clunker

    A popular reference to the old vehicle traded in under the U.S. ...
  2. Cash For Clunkers

    A program that allows car owners to trade in their old, less ...
  3. Abnormal Return

    A term used to describe the returns generated by a given security ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that ...
  5. Underperform

    An analyst recommendation that means a stock is expected to do ...
  6. Return

    The gain or loss of a security in a particular period. The return ...
Related Articles
  1. Did You Buy A Lemon?
    Home & Auto

    Did You Buy A Lemon?

  2. Used Car Shopping: How To Avoid A Lemon
    Home & Auto

    Used Car Shopping: How To Avoid A Lemon

  3. Wheels Of A Future Fortune
    Home & Auto

    Wheels Of A Future Fortune

  4. New Wheels: Lease Or Buy?
    Home & Auto

    New Wheels: Lease Or Buy?

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center