Financial glossary

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Gadfly
A nickname for a "professional" security holder who owns stock in various companies, attends annual meetings and asks senior management hard and often embarrassing questions. Financial glossary.

Gaijin
Japanese term used to describe a non-Japanese investor in Japan (outside person). A more polite version of the same word is gaikokujin which means outside country person.

Gain
A profit on a securities transaction recognized by selling a security for more than the security originally cost. The gain is the difference between the cost and the sale.

Gamma
The ratio of a change in the option delta to a small change in the price of the asset on which the option is written. Financial glossary.

Gap
Financing that is required, but for which no provision has been made. The difference in total funding needed for a proposal and the amount of funding already made available.

Gap opening
In the context of general equities, opening price that is substantially higher or lower than the previous day's closing price, usually because of some extraordinarily positive or negative news.

Garage
The floor of the NYSE, which is situated on the north side of the main trading floor. Financial glossary.

Garbatrage
Rising stock prices and increased market activity in an entire sector caused by a psychology change stemming from a major takeover involving two companies in the sector. Speculators feel other takeovers are likely in the sector.

Garman-Kohlhagen option pricing model
A model widely used to price foreign currency options.

Gather in the stops
A market strategy in which investors sell stocks to drive prices to a level that breaks through stop orders known to exist. Once the price is low enough, the stop orders become market orders and are executed, to create snowballing.

Gaussian
A system whose probabilities are well described by the normal distribution or bell shaped curve.

GDP implicit price deflator
An economic technique used to account for inflation by comparing the current-dollar gross domestic product GDP to >constant-dollar GDP as a ratio. The ratio accounts for price changes of goods and services that make up GDP and changes in the composite of GDP. Financial glossary.

Gearing
Financial leverage.

GEM - growing equity mortgage
Mortgage in which annual increases in monthly payments are used to reduce outstanding principal and to shorten the term of the loan.

General Average
Provision in maritime law where all shippers on a given voyage would reimburse the ship line in the event of vessel sinking or catastrophic damage. It also provides for the reimbursement to those shippers whose cargo was thrown overboard in order to save the vessel. Financial glossary.

General Average Contribution
The amount of money paid by each shipper involved in a General Average.

General account
Federal Reserve Board's term for a margin account provided to a customer by a brokerage firm. Governed by Regulation T of the FED.

General Agreement on Tariffs and Trade
A treaty adopted by the United Nations aimed at elimination of international trade barriers between member countries.

General cash offer
A public offering made to investors at large.

General ledger
Accounting records that show all the financial statement accounts of a business. Financial glossary.

General lien
An attachment that gives the lender the right to seize the personal property of a borrower who has not fulfilled the obligations of the loan, but prevents the lender from seizing real property.

General loan and collateral agreement
The agreement governing the broker-dealer's borrowing against listed securities from a bank for the purpose of carrying on business and making transactions.

General mortgage
A type of obligation that covers all a borrower's mortgageable properties, not just one specific property. Financial glossary.

General obligation bonds
Municipal securities secured by the issuer's pledge of its full faith, credit and taxing power.

General Order
A penalty imposed on imported goods that are not promptly cleared through customs.

General partner
A participant who has unlimited liability for the obligations of a partnership. Financial glossary.

General partnership
A partnership in which all participants are general partners. 

General revenue
The sum of taxes, charges and miscellaneous income taken in at the state and local level while neglecting overlapping revenue which may be erroneously counted twice.

Generally Accepted Accounting Principles
The overall conventions, rules and procedures that define accepted accounting practice at a particular time in the U.S.

Generation-skipping transfer or trust
A trust in which a principal amount is placed in a trust on the death of person A and is transferred to A's grandchildren when A's children die. The income from the trust goes to the children of person A while they survive. Financial glossary.

Generic
Describes the characteristics and/or experience of the total universe of a coupon of MBS sector type; that is, in contrast to a specific pool or collateral group, as in a specific CMO issue.

Genetic Algorithms
Models that optimize rules by mimicking the Darwinian Law of survival of the fittest. A set of rules are chosen by those that work the best. The weakest are discarded. In addition, two successful rules can be combined (the equivalent to genetic cross-overs) to produce offspring rules. The offspring can replace the parents, or they will be discarded if less successful than the parents. Mutation is also accomplished by randomly changing elements. Mutation and cross-over occur with low probability, as in nature. Financial glossary.

Geographic risk
Risk that arises when an issuer issues policies concentrated within certain geographic areas, such as the risk of damage from a hurricane or an earthquake.

Geometric mean return
Also called the time-weighted rate of return, a measure of the compound rate of growth of the initial portfolio market value during the evaluation period, assuming that all cash distributions are reinvested in the portfolio. It is computed by taking the geometric average of the portfolio subperiod returns. Financial glossary.

Gestation repo
A reverse repurchase agreement between mortgage firms and securities dealers. Under the agreement, the firm sells federal agency-guaranteed MBS and simultaneously agrees to repurchase them at a future date at a fixed price.

Get hit
Go lower in price, when bids in the stock or market are hit, causing those bids to vanish and be replaced by lower ones. Come in.

Ghosting
The illegal practice that one firm drives a stock's price higher or lower, while other conspiring firms follow its lead to influence up the price of the stock.

Gift splitting
A technique used to avoid a gift tax in which a large sum of money to be given by two parents to a child is halved and given to the child separately For example, a husband and wife each donate $10,000 to their child rather than one parent donating $20,000. Financial glossary.

Gift tax
A tax assessed on the giver of a property or asset as a gift. A $10,000 federal gift tax exemption exists per recipient.

Gift inter vivos
A piece of property or asset given from one living person to another.

Ginnie Mae pass through
A security guaranteed by the Government National Mortgage Association that is backed by a collection of mortgages, in which the investor receives the interest and principal payments of participating homeowners.

Give up
Used for listed equity securities. (a) Term used in a securities transaction involving three brokers, as follows: Broker A, a floor broker, executes a buy order for broker B (a member firm broker who has too much business at the time to execute the order). The broker with whom broker A completes the transaction (the sell-side broker) is broker C. Broker A "gives up" the name of broker B, so that the record shows a transaction between broker B and broker C even though the trade is actually executed between broker A and broker C; (b) distribution of commissions to brokerage houses not participating in a trade. This is a grey area of the law governing reimbursement of a broker for services (e.g. research).  Financial glossary.

Glamor stock
A popular stock characterized by high earnings growth rate and a price that rise is faster than the market average in a bull market.

Global Depository Receipt
A receipt denoting ownership of foreign-based corporation stock shares which are traded in numerous capital markets around the world.

Glass-Steagall Act
1933 legislation prohibiting commercial banks to own, underwrite or deal in corporate stock and corporate bonds.

Global bonds
Bonds designed to qualify for immediate trading in any domestic capital market and in the Euromarket.

Global fund
A mutual fund that can invest anywhere in the world, including the U.S.

Globalization
Tendency toward a worldwide investment environment and the integration of national capital markets.

GNMA-I
Mortgage-backed securities (M.B.S.) on which registered holders receive separate principal and interest payments on each of their certificates, usually directly from the servicer of the M.B.S. pool. GNMA-I mortgage-backed securities are single-issuerpools. Financial glossary.

GNMA-II
Mortgage-backed securities (M.B.S.) on which registered holders receive an aggregate principal and interest payment from a central paying agent on all their certificates. Principal and interest payments are disbursed on the 20th day of the month. GNMA-II M.B.S. are backed by multiple-issuer pools or custom pools (one issuer but different interest rates that may vary within one percentage point). Multiple-issuer pools are known as "jumbos." Jumbo pools are generally longer and offer certain mortgages that are more geographically diverse than single-issuer pools. Jumbo pool mortgage interest rates may vary within one percentage point. Financial glossary.

GNMA Midget
A GNMA pass-through certificate backed by fixed-rate mortgages with a 15-year maturity. GNMA Midget is a dealer term and is not used by GNMA in the formal description of its programs.

Gnomes
Freddie Mac's 15-year fixed-rate pass-through securities issued under its cash program.

Go along
Used for listed equity securities. Buy or sell at prices that randomly occur on the floor, participating in what trades the specialist and other players will allow.

Go around
Describes the N.Y. Federal Reserve Bank's trading desk practice of communicating with primary dealers to establish a market of bids and offers on behalf of the Federal Open Market Committee.

Goal
An individual's or institution's financial objective.

Godfather offer
An aggressive takeover technique in that the proposed offer of the acquiring company is so large that management of the target company cannot refuse, out of fear of lawsuits or shareholder revolt.

Go-go fund
A type of mutual fund in highly aggressive growth stocks. The fund has high levels of risk and potential return.

Goes
Used in the context of general equities. (a) Trades ("10 IBM goes on at 115 "); (b) indicates a change in the stock's inside market ("Apple goes 3/4 bid").

Going ahead
A broker-dealer trades in a personal account prior to filling the orders of his or her clients. Prohibited by the NASD rules of fair practice. Financial glossary.

Going away
The type of bond purchased by dealers for immediate resale to investors, as opposed to purchasing bond, to hold for some amount of time and then reselling it at a future date.

Going-concern value
The value of a company to another company or individual in terms of an operating business. The difference between a company's going-concern value and its asset or liquidation value is deemed goodwill and plays a major role in mergers and acquisitions.

Going long
The investor's purchase of a security for investment or speculation that the price will rise resulting in a profit once the security is sold.

Going out
Used in the context of general equities. Soliciting/advertising over the SS1, NASDSAQ or Autex.

Going private
When publicly owned stock in a firm is replaced with complete equity ownership by a private group. The firm is delisted on stock exchanges and can no longer be purchased in the open markets. Financial glossary.

Going public
When a private company first offers shares to the public market and investors.

Going short
Selling stock that an investor does not own by borrowing shares from a broker. The assumption is that the price will fall. The investor then buys (covers the short) the shares at a lower price than what they were sold for, recognizing the difference as a profit.  Financial glossary.

Going into the trade
Used in the context of general equities. a) Condition of the traders position in the security and expectations of stock placement with accounts just prior to taking an order to the exchange floor for execution; b) On the way in.

Gold bars
Bars with a minimum content of 99.5% gold, which may be held by central banks or traded by investors.

Gold bond
Bonds issued by gold-mining companies and backed by gold. The bonds make interest payments based on the level of gold prices.

Gold bullion
Investment-grade, pure gold, which may be smelted into gold coins or gold bars.

Gold Carry Trade
A carry trade where you borrow and pay interest in order to buy something else that has higher interest. The gold carry trade works as follows. A central bank loans a bank (sometimes called a bullion bank) some gold. The gold lease rate is usually very low. The bullion bank immediately sells the gold and invests in securities with a higher rate of return, such as government long-term bonds. The carry return is the return on the bonds minus the gold lease rate. However, this trade is risky on two dimensions. First, if the bullion bank invested in long-term bonds and the interest rate goes up, the trade could be unprofitable. More seriously, the bullion bank has effectively sold the gold short. If the loan is called by the Central bank and if gold has risen in value, the bullion bank will have to go into the market and purchase higher priced gold. Indeed, if many banks are short, the unwinding of the gold carry trade could drive the gold price even higher.  Financial glossary.

Gold certificate
Certificate of an investor, that shows proof of ownership of gold bullion.

Gold coins
Coin minted in gold, such as the American Eagle or the Canadian Maple Leaf.

Gold exchange standard
A fixed exchange rate system adopted in the Bretton Woods agreement. It required the U.S. to peg the dollar to gold and other countries to peg their currencies to the dollar.

Gold fixing
The process of determining the price of gold based on supply and demand forces of the market; which occurs twice daily in London.

Gold mutual fund
A mutual fund that primarily invests in gold-mining companies'stock.

Gold standard
An international monetary system in which currencies are defined in terms of their gold content and payment imbalances between countries are settled in gold. It was in effect from about 1870 to 1914. Financial glossary.

Goldbug
Analysts who recommends gold as an investment/hedge.

Golden handcuffs
A contract that binds a broker to a brokerage firm by offering the broker commissions and bonuses, but penalizes the broker if he or she goes to work for another firm.

Golden handshake
A large payment to a senior employee who is forced into retirement or fired as a result of a takeover or simular development.

Golden hello
A bonus a securities firm pays to attract an employee from a competing firm.

Golden parachute
Compensation paid to top-level management by a target firm if a takeover occurs.

Goldilocks economy
A term developed in the mid 1990s to describe the positive performance of the economy as "not too hot, not too cold; just right."

Good delivery
A delivery in which everything - order-endorsement, any necessary attached legal papers.

Good delivery and settlement procedures
Refers to PSA Uniform Practices such as cutoff times on delivery of securities and notification, allocation and proper endorsement. Financial glossary.

Good money
Federal funds that clear on the same day, unlike clearinghouse funds, which require three days to clear.

Good-this-Month order
An order to buy or sell securities that continues to be a valid order until the end of the current month. Financial glossary.

Good through/until date order
Used in the context of general equities. Market or limited price order that remains viable for a stated period of time unless cancelled, executed or changed, after which such order or the portion thereof not executed is to be treated as cancelled.

Good 'til cancelled order (GTC)
An order to buy or sell stock that is good until you execute or cancel it. Brokerages usually set a limit of 30-60 days, at which the GTC order expires if not restated. (Different from a day order.)

Goodwill
Excess of purchase price over fair market value of net assets acquired under the purchase method of accounting.

Government National Mortgage Association (Ginnie Mae)
A wholly owned U.S. government corporation within the Department of Housing & Urban Development. Ginnie Mae guarantees the timely payment of principal and interest on securities issued by approved servicers that are collateralized by FHA-issued, VA-guaranteed or Farmers Home Administration (FmHA)-guaranteed mortgages. Financial glossary.

Government obligations
U.S. government-backed debt instruments, which are considered among the safest investments possible, including Treasury bonds, bills, notes and savings bonds.

Government securities
Negotiable U.S. Treasury securities.

Government sponsored enterprises
Privately owned, publicly chartered entities, such as the Student Loan Marketing Association, created by Congress to reduce the cost of capital for certain borrowing sectors of the economy including farmers, homeowners and students. Financial glossary.

Governments
U.S. government-issued securities, such as Treasury bills, bonds, notes and savings bonds. Governments are considered among the safest investments available as they are backed by the U.S. government.
Also used to refer to debt issues of federal agencies, which are not directly backed by the U.S. government.

Grace period
The time period stipulated in most loan contracts and insurance policies during which a late payment will not result in default or cancellation.

Graduated call writing
Selling covered call options at incrementally rising exercise prices, so that as the price of the underlying stock rises and the options are exercised, the seller receives a higher average price than the original exercise price.

Graduated lease
A type of long-termlease whose payments are variable rather than fixed and depend upon a benchmark rate, such as changes in the consumer price index.

Graduated payment
Repayment terms calling for gradual increases in the payments on a closed-end obligation. A graduated payment loan usually involves negative amortization.

Graduated-payment mortgage
A type of stepped-payment loan in which the borrower's payments are initially lower than those on a comparable level-rate mortgage. The payments gradually increase over a predetermined period (usually 3, 5, or 7 years) and then are fixed at a level-pay schedule, which will be higher than the level-pay amortization of a level-pay mortgage originated at the same time. The difference between what the borrower actually pays and the amount required to fully amortize the mortgage is added to the unpaid principal balance. Financial glossary.

Graduated security
A security that has moved from listing on an exchange of less prominence to one of more prominence.

Graham and Dodd method of investing
An investment strategy based on security analysis and identification. Investors buy stocks with undervalued assets speculating that these assets will appreciate to their true value.

Graham-Harvey Measure 1
Performance measure developed by John Graham and Campbell Harvey. The idea is to lever a fund's portfolio to exactly match the volatility of the S&P 500. The difference between the fund's levered return and the S&P 500 return is the performance measure.

Graham-Harvey Measure 2
Performance measure developed by John Graham and Campbell Harvey. The idea is to lever the S&P 500 portfolio to exactly match the volatility of the fund. The difference between the fund's return and the levered S&P 500 return is the performance measure.

Grandfathered activities
Nonbank activities, some of which would normally not be permissible for bank holding companies and foregin banks in the United States, but which were acquired or engaged in before a particular date. Such activities may be continued under the "grandfather" clauses of the Bank Holding Company Act and the International Banking Act. Financial glossary.

Grandfather clause
A provision included in a new rule or regulation that exempts a business that is already conducting business in the area addressed by the regulation from penalty or restriction.

Grant
The issuance of an award under a stock plan, such as a stock option or shares of restricted stock.

Grant Date
The date on which an option or other award is granted.

Grantor
A trader in the options market who makes premium income by selling options.

Grantor Retained Income Trust
A tax-saving trust in which a grantor transfers property to a beneficiary, but receives income until termination, at which time the beneficiary begins receiving the income. Financial glossary.

Grantor trust
A mechanism of issuing MBS wherein the mortgages' collateral is deposited with a trustee under a custodial or trust agreement.

Graveyard market
Bear market in which investors who sell are faced with substantial losses, while potential investors prefer to stay liquid; that is, to keep their money in cash or cash equivalents until market conditions improve. Financial glossary.

Gray knight
In a merger or acquisitions, a gray knight is an acquiring company that outbids a white knight in pursuit of its own best interests, although it is friendlier than a hostile bidder.

Gray list
Formal roster of stocks that can be traded by the block desks, but not in risk arbitrage because an investment bank is involved with the company on nonpublic activity (e.g. mergers and acquisitions defense). A stock's presence on this list should never be conveyed to anyone outside the trading area, much less outside the firm.  Financial glossary.

Gray market
Describes the sale of securities that have not officially been issued to firms other than the underwriting syndicate. This type of market serves as a good indicator of demand for a new issue in the public market.

Great call
Used in the context of general equities. Potential customer who may have an interest in participating in a particular trade if customer's past inquiry or activity is any indication.

Greater fool theory
An investment notion that even when a stock is fully valued by conventional standards, there is room for upward movement because there are enough buyers to push prices farther upward purely on speculation or hype. Financial glossary.

Greenmail
The holding of a large block of stock of a target company by an unfriendly company, with the object of forcing the target company to repurchase the stock at a substantial premium to prevent a takeover.

Greenshoe option
Option that allows the underwriter for a new issue to buy and resell additional shares. Financial glossary.

Gross per broker
The dollar amount of commissions generated by a broker or registered representative over a specific period.

Gross domestic product
The market value of final goods and services produced over time including the income of foreign corporations and foreign residents working in the U.S., but excluding the income of U.S. residents and corporations overseas. Financial glossary.

Gross earnings
A person's total taxable income prior to adjustments.

Gross estate
The total value of a person's property and assets before accounting for debts, taxes and liabilities. Financial glossary.

Gross income
A person's total income prior to exclusions and deductions.

Gross interest
Interest earned before taxes are deducted.

Gross lease
A type of property lease in which the lessor (owner of the property being leased) pays expenses associated with ownership such as damages, taxes and insurance. Financial glossary.

Gross National Product
Measures and economy's total income.

Gross parity
Applies mainly to convertible securities and international equities. For the price of a convertible, including accrued interest. For the price of international security, including commissions, fees, stamp duty and other transactioncosts, translated into U.S. dollar amounts. Financial glossary.

Gross profit
Sales minus the cost of goods sold.

Gross profit margin
Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold.

Gross sales
Total sales calculated by summing all sales at invoice values, neglecting any adjustments such as customer discounts or returns. Financial glossary.

Gross spread
The fraction of the gross proceeds of an underwritten securities offering that is paid as compensation to the underwriters of the offering.

Gross Weight
The full weight (including goods and packaging) of shipment.

Ground lease
A lease of land, as opposed to a lease of a building. Financial glossary.

Group insurance
Insurance coverage for a group, which can usually be obtained at a cheaper rate than insurance for an individual.

Group of Eight (G-8)
The G-7 countries plus Russia.

Group of Five (G-5)
The five leading countries (France, Germany, Japan, the U.K., and the U.S.) that meet periodically to achieve some cooperative effort on international economic issues. When currency issues are discussed, the monetary authorities of these nations hold the meeting. Financial glossary.

Group of Seven (G-7)
The G-5 countries plus Canada and Italy.

Group of Ten (G-10)
A group of the ten major industrialized countries whose mission is to create a more stable world economic trading environment through monetary and fiscal policies. The ten are Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom and the United States. Financial glossary.

Group rotation
The tendency of stocks in one sector of the market to out perform and then under perform other industries, usually as a result of economic cycles or the conditions in a particular industry.

Group rotation manager
A top-down manager who deduces the phases of the business cycle and allocates assets accordingly.

Group sales
Blocksale (of large amounts) of securities to institutional investors.

Group Universal Life Policy
Universal life insurance on a group basis.

Growing Equity Mortgage
Mortgage with a fixed interest rate and payments that increase throughout the term of the mortgage. Financial glossary.

Growing perpetuity
A constant stream of cash flows without end that is expected to rise indefinitely.

Growth fund
A mutual fund that invests primarily in stocks with a history of and future potential for capital gains.

Growth and income fund
A mutual fund that invests primarily in stocks with a history of capital gains (growth) and consistent dividend payments. Financial glossary.

Growth manager
A money manager who seeks to buystocks that typically sell at relatively high P/E ratios due to high earnings growth, with the expectation of continued high or higher earnings growth.

Growth opportunity
Opportunity to invest in profitable projects.

Growth phase
A phase of development during which a company experiences rapid earnings growth as it produces new products and expands market share.

Growth rates
Compound annual growth rate for the number of full fiscal years shown.

Growth stock
Common stock of a company that has an opportunity to investmoney and earn more than the opportunity cost of capital. Financial glossary.

Guarantee
The assumption of responsibility for payment of a debt or performance of some obligation if the liable party fails to perform to expectations.

Guarantee Fee
A sum paid by the importer to the guarantor, usually as a percentage per annum of the face value of the bills or notes being guaranteed.

Guarantee letter
A commercial bank's letter assuring payment of the exercise price of a client's put option.

Guaranteed bond
A type of bond for which a firm other than the issuer guarantees its interest and principal payments. Financial glossary.

Guaranteed insurability
A life and health insurance policy feature that enables the insured to add coverage at future times and at fixed and agreed-upon rates regardless of health conditions.

Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time period, usually several years.

Guaranteed investment contract
A pure investment product in which a life company agrees, for a single premium, to pay at a maturity date the principal amount of a predetermined annual crediting (interest) rate over the life of the investment. Financial glossary.

Guaranteed Mortgage Certificates
First issued by Freddie Mac in 1975, G.M.C.s, like PCs, represent undivided interest in specified conventional whole loans and participations previously purchased by Freddie Mac.

Guarantor
A party who will guarantee repayment or performance of a covenant.

Guardian
An individual or trust institution appointed by a court to care for a minor or an incompetent person and his or her property.

Guaranteed renewable policy insurance
A type of insurance policy that requires the insurer to renew the policy to an individual regardless of health changes. No changes may be made to an individual policy holder unless the same change is applied to all policy holders. Financial glossary.

Guaranteed replacement cost coverage insurance
A policy that covers the full cost of replacing damaged property without any allowances or deductions, e.g. depreciation. Financial glossary.

Guaranteeing/ Avalising Bank
The person, bank or financial entity who gives the guarantee for the importer.

Guarantor program
Under the Freddie Mac program, the aggregation by a single issuer (usually an S&L) for the purpose of forming a qualifying pool to be issued as PCs under the Freddie Macguarantee.

Guidance
It is increasingly important for firms to meet or exceed analysts' consensus earnings forecasts. Often management will give guidance or hints of the earnings per share prospects over the next quarter or next year to try to direct the consensus to what is achievable. For example, it is possible that the consensus is well above management's internal forecasts. Management will try to guide the consensus downwards so that when the earnings are released the negative surprise is minimized. Under Regulation FD, management needs to be very careful to provide guidance information to all shareholders - not just a select group of analysts. This is often achieved in investor presentations (that are often webcast) or conference calls. Financial glossary.

Gun jumping
In the context of securities trading, refers to trading in a security on the basis of information that has not been made available to the public. The illegal solicitation of buy orders in an underwriting before completion and finalization of Securities and Exchange Commission registration. Financial glossary.

Gunslinger
An aggressive portfolio manager who makes risky investments, typically in margin accounts, in search of high returns.