Business and Economic Research Group Dictionary of Financial Words

G
G — The fifth letter of a NASDAQ stock symbol specifying that the issue is the first convertible bond of the company.
G-5 — See Group of Five.
G-7 — See Group of Seven.
G-8 — See Group of Eight.
G-10 — See Group of Ten.
G-20 — See Group of Twenty.
GAAP — See Generally Accepted Accounting Principles.
GAAS — See Generally Accepted Auditing Standards.
GAGAS — See Generally Accepted Government Auditing Standards.
Gain — (1) An increase in money or property value. (2) 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 sale price and the original cost if positive; it is a loss if
negative.
Gains from Trade — The increased output and income that is generated by the increased efficiency which results from
specialization and trade.
Game — (Decision Theory) Any decision-making situation in which the payoff to people’s choices depends not only on them (and
nature), but also on other people’s choices.
Game Theory — (1) A method of studying decision making in situations of conflict when the fates of those who seek different goals
are interlocked. (2) An analytical approach to competitive situations where two or more participants pursue conflicting
objectives. The theory attempts to offer a solution that resolves the conflict among the participants. In games, the participants
are competitors; the success of one is usually at the expense of the other. Each person selects and executes those strategies that
he believes will result in “winning the game.” Game theory attempts to provide a guideline for a variety of game situations. Also
see Zero-Sum Game and Positive-Sum Game.
Gamma — (1) A measurement of how fast the Delta Measure of an Option premium changes, given a unit change in the underlying
Futures price. (2) 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. (3) The second derivative of an option. It measures the expected change in the Delta (Measure) given a change in the
underlying instrument.
Gain — The excess of money or fair value of property received on sale or exchange over the carrying value of the item. An example
is the sale of a fixed asset when cash received exceeds book value. Gains also occur when the cash payment to eliminate a debt
is less than the liability’s carrying value. An example is retiring debt before maturity at a price below book value. Gains related
to incidental and nonrecurring transactions of the business. Also see Loss.
GAN — See Grant Anticipation Note.
Gantt Chart — A graphical representation of a project’s schedule used to plan or monitor its progress, completion dates, inter-related
activities, and responsibilities.
Gap — (Funding) (1) Financing that is required, but for which no provision has been made. (2) The difference in total funding
needed for a proposal and the amount of funding already made available.
Gap (GAP) — (Interest Rate Sensitivity Analysis) (1) A term used to describe differences or imbalances in asset and liability
categories or maturity “buckets.” (2) A term used to denote the dollar volume difference between a bank’s interest-rate sensitive
assets (i.e., the volume of assets that may be repriced or that will mature within a given time period) and its interest-rate sensitive
liabilities (i.e., the volume of liabilities that may be repriced or that will mature within the same given time period). The
importance of the gap lies in terms of movements to interest rates and the resultant effects on net interest income (the difference
between interest income and interest expense). If, for example, a financial institution shows a large positive gap (i.e., interest-rate
sensitive assets exceed interest-rate sensitive liabilities), then a decline in interest rates will force the bank to re-price more assets
than liabilities causing interest income to decline more than interest expense and reducing net interest income.
Gap Loan — A loan that fills the difference between the floor loan and the full amount of the permanent loan.
Gap Management — Programs, policies, and techniques used by a financial institution to minimize the effects of interest rates on
net interest income (the difference between interest income and interest expense) and therefore net income. Gap management
policies deal specifically with the pricing and repricing decisions on earning assets and paying liabilities to insure that interest
rate fluctuations causing increases in interest expense on borrowed funds are off-set by corresponding increases to interest income
on earning assets. Neutral gap management attempts to only protect net interest income; active gap management speculates on
the direction of interest rates and attempts to improve net interest income throughout the interest rate cycle.
Gap Opening — An opening price in the securities market that is substantially higher or lower than the previous day’s closing price,
usually because of some extraordinarily positive or negative news.
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. Also see

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Rumortrage.
Garnishment — The name given in some states to attachment proceedings, i.e., the seizure of property of, or a debt owed to, the
debtor by the service of process upon a third person who is in possession of the property or who owes a debt to the debtor.
GARP — Refers to Generally Accepted Risk Principles.
GASB — Refers to the Governmental Accounting Standards Board.
GATT (General Agreement on Tariffs and Trade) — The international organization set up after World War II to reduce trade
restrictions among nations. Several “rounds” of multilateral negotiations have been undertaken, and significant reductions in
trade restrictions have been achieved through this process.
GDP — See Gross Domestic Product.
GDP Implicit Price Deflator — (1) A comprehensive price level index compiled and issued quarterly by the U.S. Department of
Commerce, Bureau of Economic Analysis (BEA) and associated with the items comprising measures of Gross Domestic Product
(GDP). (2) An economic technique used to account for inflation by comparing the current-dollar 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.
Gearing — A measure of exposure. It relates the number of Warrants that can be purchased for the same price of the stock. For
example, if the stock is trading at 150 and the warrants are trading at 30, then the gearing is 5.00 or 5-to-1.
GEM — See Growing Equity Mortgage.
General Accounting Office (GAO) — An agency established to assist Congress in its oversight of the executive branch and to serve
as the independent legislative auditor of the federal government. Among other GAO duties are: (1) prescribing principles and
standards for federal agency accounting systems; (2) assisting agencies in accounting system design; and (3) reporting to
Congress on the status of agency accounting systems.
General Agreement on Tariffs and Trade (GATT) — An agreement between nations with economic interests in international trade
relations. It is dedicated to encouraging mutually beneficial bilateral agreements that focus upon reducing tariffs, restrictions,
and barriers to international trade. Established in 1948, GATT also acts as international arbitrator with respect to trade agreement
disputes.
General and Administrative Expenses (G&A) — All expenses incurred in connection with performing general and administrative
activities in a company. Examples include executive salaries and legal expenses. General and administrative expenses are shown
under “Operating Expenses” in the income statement.
General Contractor — One who constructs a building or other improvement for the owner or developer. May retain a construction
labor force or use sub-contractors.
General Creditor — A creditor who has a claim against the debtor but does not have any lien on any of the debtor’s property,
whether as security for his debt or by way of a judgment or execution upon a judgment.
General Equilibrium — (1) A situation in which all of the markets and sectors in the economy are simultaneously in equilibrium.
(2) A state of the economy in which billions of optimizing decisions by millions of decision makers are compatible with each
other because all input and output markets are in equilibrium at the same time. A condition in which all markets are said to have
“cleared,” i.e., demand and supply conditions have been satisfied with neither surpluses or shortages.
General Improvement District (GID) — A public entity created under the provisions of the specific state and authorized by the
respective county commission to provide specific services to a limited geographical area. A GID may be formed to provide one
or a combination of services such as road maintenance, parks and recreation facilities, water and sanitary sewer service. etc.
General Ledger — A book, file, or other device which contains the accounts needed to reflect, in summary and in detail, the
financial position and the results of financial operations of the governmental unit. Note: In double entry bookkeeping, the Debits
and Credits in the general ledger are equal, and therefore the debit balances equal the credit balances.
General Legacy — A legacy to be paid out of the assets generally of the Testator without specifying any particular fund or source
from which the payment is to be made.
General Lien — (1) A lien that includes all of the property owned by the debtor, rather than a specific property. (2) A lien such as
a tax lien or judgement lien which attaches to all property of the debtor rather than the lien of, for example, a Trust Deed, which
attaches only to a specific property. (3) 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 Long-Term Debt — Long-term debt legally payable from general revenues and backed by the full faith and credit of a
governmental unit. See Long-Term Debt.
General Obligation Bond (GO) — (1) A bond issued by a municipal government in which principal and interest are secured by the
full faith of the issuer, usually including the full taxing authority of the governmental entity. (2) Securities issued by
municipalities. The source of revenue to pay the interest and principal is taxes. These securities are also known as full faith and
credit issues because they depend on the municipality’s capacity to tax. (3) A security whose payment is unconditionally
promised by a government unit that has the power to levy taxes. Many state, county, city, town, and school district obligation
bonds are of this type. General obligation bonds are backed by the full faith and credit and taxing authority of the issuing
governmental entity, whether it be federal, state, or municipality. These issues are often considered to be more stable than
Revenue Bonds.
General Obligation Bonds Payable — Bonds backed by the full faith and credit of government. See Full Faith and Credit.
General Partner — In a partnership, a partner whose liability is not limited. All partners in an ordinary partnership are general
partners. A Limited Partnership must have at least one general partner.
General Partnership — A partnership in which the partners conduct as co-owners a business for profit, and each partner has a right
to take part in the management of the business and has unlimited liability.
General Purpose Financial Statements (GPFS) — Five combined financial statements that, together with the accompanying notes,

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constitute the minimum financial reporting needed for fair presentation in conformity with Generally Accepted Accounting
Principles (GAAP). These five combined financial statements, with their accompanying notes, make up the first of the financial
reporting pyramid’s three reporting levels containing financial statements. Known as the combined statements-overview, these
statements include (1) combined balance sheet – all fund types and account groups, (2) combined statement of revenues,
expenditures and changes in fund balances – all governmental fund types, (3) combined statement of revenues, expenditures and
changes in fund balances – budget and actual-general and special revenue fund types (and similar governmental fund types for
which annual budgets have been legally adopted), (4) combined statement of revenues, expenses and changes in retained earnings
(or equity) all proprietary fund types, and (5) combined statement of changes in financial position – all proprietary fund types.
Trust fund operations may be reported in (2), (4) and (5) above, as appropriate, or separately. The combined statements-overview
also are referred to as the “liftable” GPFS.
General Warranty Deed — (1) A deed in which the Grantor agrees to protect the Grantee against any other claim to title of the
property and provides other promises. (2) A deed which conveys not only all the grantor’s interests in and title to the property
to the grantee, but also warrants that if the title is defective or has a “cloud” on it (such as mortgage claims, tax liens, title claims,
judgments, or mechanic’s liens against it) the grantee may hold the grantor liable.
Generally Accepted Accounting Principles (GAAP) — (1) A group of standards or guides to action in preparing financial
accounting reports the content and usefulness of which have evolved over many decades. (2) The accounting rules and
conventions as promulgated by the Financial Accounting Standards Board (FASB) which constitute the primary source of
accounting rules followed by certified public accountants (CPAs) and auditors. (3) Uniform minimum standards and guidelines
for financial accounting and reporting. They govern the form and content of the financial statements of an entity. GAAP
encompass the conventions, rules and procedures necessary to define accepted accounting practice at a particular time. They
include not only broad guidelines of general application, but also detailed practices and procedures. GAAP provide a standard
by which to measure financial presentations. The primary authoritative body on the application of GAAP to state and local
governments is the Governmental Accounting Standards Board (GASB).The primary purpose of such principles is to establish
uniform principles for financial accounting and in the preparation of financial statements. (4) Standards, conventions, and rules
accountants follow in recording and summarizing transactions, and in the preparation of financial statements. GAAP derive, in
order of importance, from: (a) issuances from an authoritative body designated by the American Institute of Certified Public
Accountants (AICPA) Council, for example, the Financial Accounting Standards Board (FASB) Statements, AICPA Accounting
Principles Board (APB) Opinions, and AICPA Accounting Research Bulletins; (b) other AICPA issuances such as AICPA
Industry Guides; (c) industry practice; and (d) accounting literature in the form of books and articles. Principles also derived
from tradition, such as the concept of matching expenses with revenues. In the audit report, the Certified Public Accountant
(CPA) must indicate that the client has followed GAAP in the preparation of the financial statements on a consistent basis.
Generally Accepted Auditing Standards (GAAS) — Broad rules and guidelines promulgated by the American Institute of Certified
Public Accountants’ (AICPA) Auditing Standards Board. Certified Public Accountants (CPAs) employ GAAS in preparing for
and performing audits of a client’s financial statements. The guidelines include references to the auditor’s qualifications (general
standards), audit field work (statements of field work), and reporting the audit results (standards of reporting). The broad
standards are backed by detailed interpretative literature. An auditor unable to express an opinion on the financial statements
must give reasons. A CPA who does not conduct an examination in accordance with GAAS can be held in violation of the
AICA’s Code of Professional Ethics and face legal action by affected parties. Also see Statements on Auditing Standards (SAS).
Generally Accepted Government Auditing Standards (GAGAS) — Standards established by the Government Accounting Office
(GAO) in its publication standards for audit of governmental organizations, programs, activities and functions (“yellow book”)
for the conduct and reporting of both financial and performance audits. GAGAS set forth general standards applicable to both
types of audits and separate standards of field work and reporting for financial and performance audits. The GAGAS standards
of field work and reporting for financial audits incorporate and build upon GAAS.
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.
Gentlemen’s Agreements — Informal oral understandings among Oligopolists in the same industry that they will maintain a certain
minimum price.
Gentrification — The displacement of lower-income residents by higher-income residents in a neighborhood. Generally occurs
when an older neighborhood is rehabilitated or revitalized.
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, it is a measure of the compound rate of growth of the
initial portfolio’s 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 sub-period returns.
GI Loan — Same as VA Loan.
GIC — See Guaranteed Investment Contract.
GID — See General Improvement District.
Giffen’s Paradox — A situation in which consumers buy less of an item when its price is lower and more when it is higher, all else
being equal.
Gift Deed — A deed for which consideration is love and affection and no material consideration is involved.
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

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donating $20,000.
Gift Tax — Federal tax upon a monetary gift to a relative or friend. Generally, each person may give up to $10,000 per year to each
person without imposition of a federal gift tax. On higher gifts, there may be a gift tax, or the gift may affect the donor’s estate
tax.
GIGO — One of the fundamental laws of computer science which stands for “Garbage In, Garbage Out.” The term has now been
broadened and applied to all aspects of financial analysis. See the SWAG Method for obtaining inputs to a GIGO system.
Gilt-Edged — High-grade bond issued by a company that has demonstrated its ability to earn a comfortable profit over a period of
years and pay its bondholders their interest without interruption.
Gilt-Edged Bond — A high-grade bond issued by a company that has demonstrated its ability to repay its debt obligations and show
sufficient earnings to cover its outstanding debt obligations.
GIM — See Gross Income Multiplier.
GIM Membership (CBOT) — A Chicago Board of Trade (CBOT) membership that allows an individual to trade all futures
contracts listed in the government instrument market category.
Gini Coefficient — The ratio of two areas in the Lorenz curve graph that summarizes the extent of income or wealth inequality; the
ratio of the area between the line of perfect equality and actual inequality to the area between the line of perfect equality and the
line of perfect inequality.
Ginnie Mae — See Government National Mortgage Association (GNMA).
Ginnie Mae Certificate — Nickname for securities guaranteed by the Government National Mortgage Association (GNMA), which
buys up mortgages in the secondary market and sells them to investors via securities known as Ginnie Mae pass-through
certificates.
Ginnie Mae Pass-Through — A security guaranteed by the Government National Mortgage Association (GNMA) that is backed
by a collection of mortgages, in which the investor receives the interest and principal payments of participating homeowners.
See Ginnie Mae Pass-Through Certificates.
Ginnie Mae Pass-Through Certificates — (1) A pass-through certificate secured by a pool of mortgage loans insured by the
Government National Mortgage Association (GNMA), an arm of the federal government. Ginnie Mae pass throughs often provide
high yields with security to investors, although the returns may be affected by the pattern of loan repayments on the mortgages
in the pool. (2) A mortgage-backed security which provides the holder or investor a proportional interest in a pool of residential
mortgages which are guaranteed by the GNMA. The term pass-through is derived from the fact that the originating entities, i.e.,
banks, mortgage bankers, or savings institutions, distribute all principal and interest, to include repayments, directly to the
investor. Ginnie Mae securities are backed by pools of residential mortgages that are guaranteed by the Department of Veterans
Affairs (VA) or insured by the Federal Housing Administration (FHA).
Glamor Stock — A popular stock characterized by high earnings growth rate and a price that rises faster than the market average
in a Bull Market.
Glass-Steagall Act — 1933 legislation prohibiting commercial banks to own, underwrite, or deal in corporate stock and corporate
bonds.
Global Depository Receipt — A receipt denoting ownership of foreign-based corporation stock shares which are traded in numerous
capital markets around the world.
Global Fund — A Mutual Fund that can invest anywhere in the world, including the United States.
Globalization (Business) — A term used to describe business, economic, and financial concepts of world-wide linkages among
businesses, economies, and financial markets. Globalization deals in concepts in which national borders have no true meaning;
production and labor is thought of on a world-wide basis with manufacturing shifting to areas showing the greatest overall levels
of productivity. Similarly, financial markets are thought of in a global sense rather than on a national basis. In this way,
economies become more critically intertwined and efforts by national governments to control markets grow increasingly less
effective due to more extensive options to shift production and funds on a world-wide basis.
GLOBEX® — A global after-hours electronic trading system.
GMC — See Guaranteed Mortgage Certificate.
GNMA — See Government National Mortgage Association or Ginnie Mae.
GNMA-I — Mortgage Backed Securities (MBSs) on which registered holders receive separate principal and interest payments on
each of their certificates, usually directly from the servicer of the MBS pool. GNMA-I mortgage-backed securities are
single-issuer pools.
GNMA-II — Mortgage Backed Securities (MBSs) 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 MBS 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.
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 Government National Mortgage Association (GNMA) in the formal description of its programs.
GNP — See Gross National Product.
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 (FOMC).
Go-Go Fund — A type of Mutual Fund in highly aggressive growth stocks. The fund has high levels of risk and potential return.
Going Concern — An accounting principle to the effect that, without evidence to the contrary, a business is assumed to have an

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indefinite life.
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 with the belief that the price will rise, thereby
resulting in a profit once the security is sold. Also see Long Position. Contrast with Going Short.
Going Private — A term used to indicate 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. Contrast with Going
Public.
Going Public — (1) The process of selling shares that were formerly privately-held to new investors for the first time. (2) When
a closely held corporation (or its principal stockholders) sells stock to the public at large, the company is said to be “going
public.” (3) The process by which shares of common stock are first offered for sale to the public either through organized stock
exchanges (i.e., New York Stock Exchange) or the Over-the-Counter (OTC) Market (i.e., National Association of Securities
Dealers and Quotations). The advantages of going public must be weighed against the disadvantages. Going public may give
the company and major stockholders greater access to raising funds through the Capital Markets, as well as additional prestige
to the company and create additional wealth for executives and shareholders. It also means that shares assume a market value,
that is, a value placed on expected future earnings of the company. On the other hand, the company must open its books to the
public through Securities and Exchange Commission (SEC) and state required financial filings and put up with pressure for short-
term performance by security analysts and large institutional investors holding company stock. Also referred to as an Initial
Public Offering (IPO).
Going Short — Selling stock that an investor does not own by borrowing shares from a broker. The assumption is that the price of
the security will fall and therefore may be purchased at a later date at a lower price. 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. Contrast with Going Long.
Gold Bars — Bars with a minimum content of 99.5 percent 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 Certificate — (1) Certificate that shows proof of ownership of Gold Bullion. (2) A “dollar bill” which is backed by and
convertible into gold. The only gold certificates now in use in the United States are those which are held by the Federal Reserve
Banks.
Gold Coins — Coins minted in gold, such as the United States American Eagle or the Canadian Maple Leaf.
Gold Exchange Standard — (1) A variation on the gold standard. Under the gold exchange standard a country pegs the value of
its currency to the value of the currency of some other country which is on the gold standard. (2) 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 Mutual Fund — A mutual fund that primarily invests in gold-mining companies’ stock.
Gold Standard — (1) A monetary system that pegs the value of a country’s currency to a fixed amount of Gold Bullion. When done
by a number of countries, the process therefore establishes Fixed Exchange Rates among the various currencies. The gold
standard was effectively abandoned by the United States in 1971 at which time major nations went to a more or less Floating
Exchange Rate System whereby exchange rates were determined by fundamental economic conditions of demand and supply.
(2) 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.
Gold Tranche — The amount that each member country of the International Monetary Fund (IMF) contributes in the form of gold
as part of its membership quota in the fund. This amount can be borrowed readily by the contributing country.
Goldbug — An analyst who recommends gold as an investment or a 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 Parachute — Compensation paid to top-level management by a target firm if a takeover occurs.
Good — Anything people find useful or desirable. Anything people want to have or to use. If the supply of a good is limited relative
to the demand for it, then it is a scarce good so it is an Economic Good and it will have a price. If the supply is unlimited, it will
be a free good. In economics, services are usually included as “goods.”
Good and Marketable Title — Title to a piece of real estate that can be shown, usually by Title Search or Abstract of Title to be
vested in the owner of record, and free of claims or liens that would impair its marketability.
Good and Merchantable Title — Same as Good and Marketable Title.
Good Delivery — Certain basic qualifications that must be met before a security sold on the exchange may be delivered. The
security must be in proper form to comply with the contract of sale and to transfer title to the purchaser.
Good Faith — An act done honestly.
Good Faith Deposit — (1) (Commodities) Refers to the initial Margin Account deposit needed when buying or selling a Futures
Contract typically amounting to approximately 2-10 percent of the contract value. (2) (Securities) Used to describe the deposit
required by securities firms engaged in transactions on behalf of a new client. (3) (Municipal Bonds) Used to refer to the deposit
with a municipal bond issuer by firms competing for the Underwriting business of the issuing municipality.

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Good-this-Month Order (GTM) — An order to buy or sell securities that continues to be a valid order until the end of the current
month.
Good-‘til-Canceled Order (GTC) (or Open Order) — (1) An order to buy or sell that remains in effect until it is either executed
or canceled. (2) An order to buy or sell a security at a specified price, which stays in effect until it is executed by the broker
because that price was reached, or until it is canceled by the customer. (3) An order to buy or sell a security that is good until
the investor cancels it. Most brokerage firms let GTC orders automatically expire after 30-60 days.
Goodness of Fit — (Data Analysis and Forecasting) Generally speaking, a “good” Econometric Forecast Model is one which helps
to explain or account for a large proportion of the Variance in the Dependent Variable. Large residuals, or unexplained
variations, i.e., Disturbance or Error Terms, imply a poor fit, while small residuals imply a good fit. As a more precise measure
of this goodness of fit, a Coefficient of Determination, or R2, is used which measures the proportion of the total variation in the
dependent variable which is explained by the variations in the Independent Variable(s). Other measures of goodness of fit are
used for different models or types of variables. Scientific models are generally evaluated on: (1) their Parsimony (simplicity
or the frugal use of Explanatory Variables; all other things being equal, simpler is better); (2) goodness of fit (all other things
being equal, better goodness of fit is better); and (3) the intuition or judgement of the analyst or model builder (all other things
being equal, choose the model that in your judgement is more “correct”). Also see Criteria Testing.
Goods — The means by which people satisfy their material wants, including tangible commodities as well as intangible services.
Goodwill — (1) A business asset of intangible value created by customer and supplier relations. (2) The dollar value of intangible
assets maintained by a company for financial reporting purposes, e.g., patent values, trademarks, acquisition costs, etc. (3)
Intangible assets of a firm established by the excess of the price paid for the going concern over its book value. (4) That value
that derives from the ability of a firm to earn more than a normal rate of return on its physical assets. (5) An accounting term
for the difference between what an acquiring company pays for an acquisition and the value of the Net Assets of the acquired
company. Goodwill is recognized in the accounts only when it is acquired through specific purchase and payment (as opposed
to gradual development). Under current Financial Accounting Standard Board (FASB) rules, acquired goodwill is required to
be amortized for financial reporting purposes, but does not constitute a tax-deductible expense. Therefore, it appears on financial
statements as an expense item, but is not deductible for tax purposes. (5) In theory, the Present Value of future excess earnings
of a company over other companies in the industry due to some intangible asset or assets. Simply, it is the value of the
company’s name and reputation, its customer relations, and other factors that, although intangible, give a going concern its
competitive edge and produce better-than-typical future earnings. Goodwill can only be recorded in a business combination
accounted for under the Purchase (Accounting) Method. Goodwill equals the purchase price less the book value of the acquired
company’s net assets less the amount by which the acquired company’s depreciable assets are written up to their Fair Market
Value. The fair market value of the total going concern should be equal to the purchase price. As an intangible asset, goodwill
is required to be Amortized over the period beneficial to the company, but not to exceed 40 years. The amortization of goodwill
is recorded for financial reporting purposes, but is not recorded as a tax-deductible expense. Also see Impaired Goodwill.
Government Bond — Used to designate debt obligations of the U.S. government, consisting of U.S. Treasury bills, notes and bonds,
and carrying the highest credit rate possible. Also referred to as Government Securities.
Government National Mortgage Association (GNMA or “Ginnie Mae”) — Most commonly referred to as Ginnie Mae, a
government owned corporation which is an agency of the U.S. Department of Housing and Urban Development (HUD). GNMA
serves to guarantee the timely payment of principal and interest on securities backed by pools of residential mortgages that are
guaranteed by the Department of Veterans Affairs (VA) or insured by the Federal Housing Administration (FHA) or Farmers
Home Administration (FmHA) guaranteed mortgages. GNMA, along with the Federal National Mortgage Association (FNMA
or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”) stimulates housing lending
and construction by establishing and maintaining a strong secondary market for residential mortgages.
Government Obligations — United States government-backed debt instruments which are considered among the safest investments
possible, including U.S. Treasury bonds, bills, and notes, and savings bonds. Also see Government Securities.
Government Rectangular Survey — A rectangular system of land survey that divides a district into 24-square mile quadrangles
from the meridian (north-south line) and the baseline (east-west line); the tracts are divided into 6-mile square parts called
townships, which are in turn divided into 36 tracts, each 1 mile square, called sections which consist of 640 acres each.
Government Securities — (1) Negotiable U.S. Treasury securities. (2) The Bureau of the Public Debt issues three types of
marketable securities: U.S. Treasury bills, notes and bonds. These securities are direct obligations of the United States
Government. (3) Government (Treasury) bonds, notes, certificates, “bills” and all other “debt instruments” sold by the
government to finance the government debt.
Government Securities Fund — A Mutual Fund that invests in government securities.
Government Sponsored Enterprise (GSE) — (1) A quasi-governmental organization that is privately owned but was created by
the government and retains certain privileges not afforded totally private entities. Examples of GSEs include Fannie Mae, or
the Federal National Mortgage Association (FNMA), and Freddie Mac, or the Federal Home Loan Mortgage Corporation
(FHLMC). (2) Privately owned, publicly chartered entities, such as the Student Loan Marketing Association (“Sallie Mae”),
created by Congress to reduce the cost of capital for certain borrowing sectors of the economy including farmers, homeowners,
and students.
Governmental Accounting — A subdivision of accounting practice relating primarily to accounting for federal, state, or local
governmental units.
Governmental Accounting Standards Board (GASB) — The authoritative accounting and financial reporting standard-setting body
for government entities.
Governments — (1) United States government-issued securities, such as U.S. Treasury bills, notes, and bonds, and savings bonds.

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Governments are considered among the safest investments available as they are fully backed by the U.S. government, which
makes them virtually default free (i.e., riskless). (2) Also, the term governments is used to refer to debt issues of federal agencies,
which are not directly backed by the U.S. government.
GPM — See Graduated Payment Mortgage (GPM).
Grace Period — The period during which one party of a financial transaction may fail to perform without being considered in
default.
Grade — (1) Ground level at the foundation. (2) To prepare a smooth surface on a site.
Graded Lease — Synonymous with Graduated Lease.
Grades — Refers to the quality of a potentially deliverable commodity. It can refer to sulfur content for crude oil, country of origin
for coffee or cocoa, or other distinguishing factors which influence the quality or nature of an item. Often there is a schedule
of premiums and discounts to adjust the invoice or delivery price for grade differences.
Gradient — The slope or rate of increase or decrease in the elevation of a surface; usually expressed as a percentage of the vertical
rise (or decline) to the horizontal distance. Therefore a rise of six feet over a distance of 100 feet represents a gradient (or grade)
of 6 percent (i.e., 6/100).
Graduated Lease — (1) A type of long-term lease whose payments are variable rather than fixed, and depend upon a benchmark
rate, such as changes in the Consumer Price Index (CPI). (2) A lease that provides for graduated changes, at stated intervals,
in the amount of rent.
Graduated Payment Mortgage (GPM) — (1) A type of flexible-payment mortgage where the payments increase for a specified
period of time and then level off. (2) A mortgage requiring lower payments in early years than in later years. Payments increase
in step each year until the installments are sufficient to Amortize the loan. (3) A fixed rate mortgage designed with low payments
in the initial years and higher payments later on, thereby better accommodating the financial capabilities of first-time buyers and
younger home owners. In a typical GPM, the mortgage payments would increase by a fixed amount each year over the first 5-10
years of a 30-year mortgage and then level off after that. (4) 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.
Graduated Security — A security that has moved from listing on an exchange of less prominence to one of more prominence.
Grandfather Clause — (1) The clause in a law permitting the continuation of a use, business, etc., which was permissible but
because of a change in the law is now no longer permissible. (2) When a law is changed or a new law is passed, those whose
specific activity was legal under the previous law are often allowed to continue, by virtue of this provision. (3) 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.
Grandfathered Activities — Nonbank activities, some of which would normally not be permissible for Bank Holding Companies
(BHC) and foreign 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.
Grant — (1) A technical term used in deeds of conveyance of property to indicate a transfer. (2) Convey real property; an instrument
by which such property has been conveyed, particularly in the case of a government. (3) A contribution by one governmental
unit to another unit. The contribution is usually made to aid in the support of a specified function (for example, education), but
it is sometimes also for general purposes.
Grant Anticipation Notes (GANs) — Short-term, interest-bearing notes issued by a government in anticipation of grants to be
received at a later date. The notes are retired from proceeds of the grants to which they are related.
Grantee — (1) The buyer, who receives a deed. (2) That party in the deed who is the buyer or recipient.
Grantor — (1) The seller, who gives a deed. (2) That party in the deed who is the seller or giver. (3) The party who initially sells,
writes, or grants an Option.
Grantor/Grantee Index — A reference kept with public records that cross-indexes grantors and grantees with one another and the
properties they relate to.
Grantor Retained Income Trust (GRIT) — 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.
Grants — The process of initially selling or writing an Option.
Grants-in-Aid — Grants given by a higher level of government to pay part of the cost of a specific program undertaken by a lower
level of government. For example, federal payments to the states to help to pay for the construction of the interstate highway
system. Also see Grant.
Graveyard Market — Bear Market in which investors who sell are faced with substantial losses, while potential investors prefer
to stay liquid; that is, investors prefer to keep their money in cash or cash equivalents until market conditions improve.
Gray Knight — In a Merger or Acquisition, 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 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 Depression — The unusually severe Recession in the United States that lasted from 1929 until, essentially, the beginning of
World War II when increased government spending brought the nation out of this depression.
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.

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Green — Refers to a Mortgage Backed Securities’ term which indicates mortgages which are not seasoned yet. Typically, a
mortgage that is less than 30 months old is considered green.
Green Shoe — Refers to an Underwriting allotment which is in excess of the first stipulated share amount. Depending on demand
and/or market stabilizing functions, an underwriter can exercise this option for additional shares. Many new deals now have this
option included. Usually, the green shoe is limited to an additional 15 percent of new shares. It was named after the company
for which it was the focus of the deal.
Greenmail — The holding of a large block of stock of a targeted company for acquisition by an unfriendly company, with the object
of forcing the target company to repurchase the stock at a substantial premium to prevent a less-than-friendly takeover.
Gresham’s Law — Simply put, “Bad money drives out good money.” The idea is that if there are two different types of money in
use (for example, gold coins and silver coins) and one is more valuable than the other, people will always spend the less valuable
kind and hold on to the more valuable kind. So the “bad money” drives the “good money” out of circulation.
Gridlock — A market condition whereby trading activity ceases or becomes extremely constrained. Frequently, the spreads between
bids and offers widen dramatically and volume dries up. Therefore, there are very few, if any, trades.
GRM — See Gross Rent Multiplier (GRM).
Gross — Refers to the aggregate, cumulative, or total amount and is a quantity measure. It can refer to total long position, total short
position, the total par position, total market value, the total futures contract equivalency position or some other specified
categorization.
Gross Area — The total floor area of a building, usually measured from its outside walls.
Gross Bonded Debt — The total amount of direct debt of a governmental unit represented by outstanding bonds before deduction
of any assets available and earmarked for their retirement. Also see Direct Debt.
Gross Domestic Product (GDP) — (1) The total “gross value” of all goods and services produced in the domestic economy in one
year. GDP figures reflect the “annual rate of gross output” of the economy. (2) The market value of 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. (3) The current dollar measure of the total value of goods and services produced in
the domestic economy during a specific period of time, usually one year. Real GDP is nominal GDP, or current dollar GDP
adjusted for price level changes. GDP is the broadest economic measure of a nation’s total economic output and is used to gauge
the level of an economic system’s activity relative to measures of inflation or potential growth. GDP estimates are made by the
U.S. Department of Commerce, Bureau of Economic Analysis (BEA) and are published on an annualized basis every quarter.
GDP is most typically measured by estimating the expenditures of four major economic sectors in the economy:
[1] Households – a measure of total Personal Consumption Expenditures (PCE), consisting of PCE for durable goods,
nondurable goods, and services;
[2] Businesses – Consists of business investment expenditures for plant and equipment, housing construction, and the
net change in inventory, which adds to GDP that which was produced in the current period but was not sold and
subtracts from current GDP that which was produced in a prior period but was sold in the current period;
[3] Foreign – consists of net exports, i.e., exports less imports which adds to domestic output those goods produced
domestically but sold outside the country (i.e., exports), and subtracts out of GDP measures those goods sold
domestically but produced in a foreign country (i.e., imports);
[4] Government – government expenditures at the national level to include national defense spending, as well as all
expenditures made by state and local governments.
Gross Income — (1) Income before expenses. (2) Total income from property before any expenses are deducted.
Gross Income Multiplier (GIM) — Synonymous with Gross Rent Multiplier.
Gross Leasable Area — The floor area that can be used by tenants. Generally measured from the center of joint partitions to outside
wall surfaces. Contrast with Net Leasable Area.
Gross Lease — A lease of property whereby the landlord (lessor) is responsible for paying all property expenses, such as taxes,
insurance, utilities, and repairs.
Gross Margin — (1) In manufacturing, the excess of sales over the cost of sales (i.e., Cost of Goods Sold, CGS), expressed as a
percentage. Frequently used interchangeable with the term gross profit; however, sometimes financial analysts differentiate these
terms by excluding overhead costs from the cost of sales when calculating the gross margin. (2) The excess of total sales over
Cost of Sales (also referred to as the Cost of Goods Sold) expressed as a percentage as in Gross Margin = (Sales - Cost of Goods
Sold)/Sales. When expressed as a dollar amount (i.e., sales minus cost of goods sold) it is called the Gross Profit. (3) With
regard to an Adjustable Rate Mortgage (ARM), an amount expressed as percentage points, stated in the note which is added to
the current index value on the rate adjustment date to establish a new note rate.
Gross National Product (GNP) — (1) Gross Domestic Product (GDP) plus the income accruing to domestic residents as a result
of investments abroad less income earned in domestic markets accruing to foreigners abroad. (2) The value, at market prices,
of all final goods and services produced in the economy during a given time period, whether that production is by nationals
abroad or by foreigners domestically. It is a measure of the aggregate production of the economy during that time period.
Contrast with Gross Domestic Product (GDP), which measures all goods and services produced in the domestic economy,
discounting production by national firms made outside the U.S. and adding production of foreign firms within the U.S. More
recently, in keeping with international convention, GDP has replaced GNP as the most accepted measure of U.S. productive
output.
Gross Possible Rent — Synonymous with Potential Gross Income.
Gross Private Domestic Investment (GPDI) — The total amount of spending by business and households on plant, equipment,

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inventories, and housing in the domestic economy.
Gross Profit — (1) The excess of total sales over Cost of Sales (also referred to as the Cost of Goods Sold). Also referred to as Gross
Margin when expressed as a percentage. (2) Net sales less the Cost of Goods Sold (CGS).
Gross Profit Inventory Method — A procedure for estimating the cost of ending inventories by multiplying the representative cost
of goods sold percentage times sales and deducting that amount from goods available for sale.
Gross Profit Margin — Gross profit as a percentage of revenues (or sales).
Gross Profit Ratio — In an installment sale, the relationship between the gross profit (gain) and the contract price. The resulting
fraction is applied to periodic receipts from the buyer to determine the taxable gain from each receipt.
Gross Rent Multiplier (GRM) — The sales price divided by the contract rental rate.
Ground Lease — The owner grants a long term lease of the land (usually 99 years) and allows the lessee to build and use the land
as agreed. At the end of the term, the land and all improvements revert to the owner.
Ground Rent — (1) The rent earned by leased land. (2) Rent paid for vacant land. If the property is improved, ground rent is the
portion attributable to the land only.
Group Insurance — Insurance coverage for a group or class of workers, which can usually be obtained at a cheaper rate than
insurance for an individual.
Group of Eight (G-8) — The Group of Seven (G-7) countries plus Russia.
Group of Five (G-5) — The five leading industrial 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.
Group of Seven (G-7) — The Group of Five (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 nations include Belgium, Canada, France, Germany, Italy,
Japan, the Netherlands, Sweden, the United Kingdom, and the United States.
Group of Twenty (G-20) — An international organization created in 1999 of the financial ministers and secretaries of member
nations to address international financial concerns. Membership consists of the European Union (EU) acting as one member,
and 19 other nations, to include: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan,
Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States.
Group Rotation — The tendency of stocks in one sector of the market to outperform and then underperform other industries, usually
as a result of economic cycles or the conditions in a particular industry.
Group Universal Life Policy (GULP) — Universal Life Insurance on a group basis. See Group Insurance.
Growing Equity Mortgage (GEM) — (1) A mortgage with a fixed interest rate and payments that increase throughout the term of
the mortgage. A mortgage in which annual increases in monthly payments are used to reduce outstanding principal and to shorten
the term of the loan. (2) A mortgage loan in which the payment is increased by a specific amount each year, with the additional
payment amount applied to principal retirement. As a result of the added principal retirement, the maturity of the loan is
significantly shorter than a comparable level-payment mortgage.
Growth and Income Fund — A Mutual Fund that invests primarily in stocks with a history of capital gains (growth) and consistent
dividend payments (income).
Growth Fund — (1) A Mutual Fund that invests primarily in stocks with a history of and future potential for capital gains. (2) An
investment company whose primary objective is to maximize the market value of its assets over time. Contrast with Income
Fund. (3) A fund whose rate of growth over a period of time is considerably greater than that of business generally. An average
rate of 10 percent per year is used by some analysts as definitive of a growth fund.
Growth Funds — Refers to Mutual Funds that invest in stocks of companies which are expected to outperform most other firms.
This greater than market performance is predicated on faster growth than comparable firms in the same industry. Also, these
industries can be those which are expected to experience growth rates in excess of an average.
Growth Mutual Funds — Mutual funds that tend to invest in faster-growing businesses whose shares trade at higher prices relative
to company earnings. In general, such fund shares tend to show greater price volatility during the course of a business cycle.
Contrast to Value Mutual Funds.
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 — The compounded annualized rate of growth of a company’s revenues, earnings, dividends or another relevant
financial figure.
Growth Stock — (1) Stock of a company with a record of relatively rapid growth in its earnings. (2) A stock of a corporation whose
earnings and prospects are positive enough to indicate an increasing value over an extended period of time. (3) Common stock
of a company that has an opportunity to invest money and earn more than the opportunity cost of capital.
GTC — See Good-‘til-Canceled (Order).
GSE — Refers to a Government Sponsored Enterprise.
Guarantee — The assumption of responsibility for payment of a debt or performance of some obligation if the liable party fails to
perform up to expectations.
(To) Guarantee (a Loan) — To agree to indemnify the holder of a loan to all or a portion of the unpaid principal balance in case
of default by the borrower.
Guaranteed Bond — A bond which is secured by the repayment obligation of principal and interest of another company or by the
parent company.
Guaranteed Exchange Rate Contract — See Quanto.

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Guaranteed Investment Contract (GIC) — A pure investment product in which a life insurance 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.
Guaranteed Loan — A loan for which principal and interest are guaranteed by a federal agency, for example loans guaranteed by
the Department of Veterans Affairs (VA), the Small Business Administration (SBA), or the Student Loan Marketing Association.
Guaranteed Mortgage Certificate (GMC) — (1) A mortgage backed bond which is backed by a pool of mortgages issued by the
Federal Home Loan Mortgage Corporation (“Freddie Mac”). The bonds have a guaranteed average life and pay principal and
interest semiannually. If the underlying mortgages prepay at a rate faster than the guaranteed minimum rate, the investor receives
full payment. (2) First issued by Freddie Mac in 1975, GMCs, like Passthrough Certificates (PCs), represent an undivided
interest in specified conventional whole loans and participations previously purchased by Freddie Mac.
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 policyholder unless the same change is applied to all
policyholders.
Guaranteed Replacement Cost Coverage Insurance — A policy that covers the full cost of replacing damaged property without
any allowances or deductions, e.g., depreciation.
Guarantor — (1) A person or entity guaranteeing payment by another. (2) One who by contract undertakes “to answer for the debt,
default, and miscarriage of another.” In general, a guarantor undertakes to pay if the principal debtor does not.
Guaranty (Guarantee) — (1) An assurance provided by one party that another party will perform under a contract. (2) A three-
party agreement in which one party (the Guarantor) pledges to fulfill the obligation of another party should that person or entity
fail to do so. (3) An undertaking to pay the debt of another if the creditor first sues the debtor and is unable to recover the debt
from the debtor or principal. (In some instances the liability is primary, in which case it is the same as Suretyship.)
Guardian — (1) One appointed by a court to administer the personal affairs or property of an individual who is not capable of such
duties. (2) One appointed by the court to administer the affairs of a minor. A guardian ad litem is appointed to protect one’s
interest in a particular legal action. Also see Conservator.
Guideline Lives — Depreciable lives, for buildings and equipment, that are used in trade or business. Generally applied to assets
bought before 1981; the Accelerated Cost Recovery System (ACRS) applies to depreciable assets bought in 1981-1986; the
Modified Accelerated Cost Recovery System (MACRS) applies to purchases after 1986.

©2001-2002 Great Basin Research

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