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Glossary


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Gainer

Stocks that increase in value over the course of the trading day are described as gainers or advancers. Those that increase the most in relation to their opening price are called percentage gainers, or percentage winners. Those that go up the greatest number of points are called net gainers, or dollar winners. On a day that the stock market indexes go up, there are typically more gainers than there are losers or laggards — stocks that have lost value. And on a day where there's little change, there are likely to be similar numbers of gainers and losers.


General account

A general account is a deposit account. In the insurance industry, a general account is the account into which all incoming funds, except those designated for a separate account, are deposited. Deposits to a general account include premiums for life insurance and fixed annuities, plus assets in the fixed portfolios of variable annuities. Assets in a general account can be used to cover company expenses and are vulnerable to creditors’ claims. In fact, this account can be sued to pay the firm’s obligations. That’s one reason that contract holders are cautioned that payouts are subject to the insurer’s ability to pay its claims. The Federal Reserve considers brokerage firms’ margin accounts that are governed by Regulation T as general accounts. The Fed requires that all margin transactions made on behalf of clients be conducted through the clients’ individual general accounts.


General Agreement on Tariffs and Trade (GATT)

A General Agreement on Tariffs and Trade was signed in 1947 to provide an international forum to encourage free trade, reduce tariffs, and provide a mechanism for resolving trade disputes. The Uruguay Round Agreements Act was ratified by Congress in 1994 to foster trade by cutting international tariffs, standardizing copyright and patent protection, and liberalizing trade legislation.


General obligation (GO) bond

State and local governments issue general obligation (GO) municipal bonds and pay the interest and repay the principal from general revenues. GO bonds considered somewhat less risky, and so pay slightly lower rates, than the same municipality's revenue bonds, which are backed by income from a specific project or agency. A municipality's general revenues come from the taxes it is able to raise and money it can borrow. Those powers are sometimes described as its full faith and credit.


Gift tax

A gift tax is a tax on the combined total value of the taxable gifts you make that exceed your lifetime federal tax-exempt limit of $1 million. The tax is figured as a percentage of the value of your gifts over that amount. For example, if during your lifetime you make taxable gifts of money and property valued at $1.2 million, you will owe federal gift tax on $200,000. You might also owe state gift tax, depending on where you live.However, you can make annual tax-free gifts to as many individuals and nonprofit institutions as you like. As long as the value of the gifts to each individual is less than the annual limit set by Congress, that amount doesn't count against your lifetime tax-free limits. Gifts to nonprofits are not taxed and don't count against your lifetime limit either.If you’re married, you can give your spouse gifts of any value at anytime, totally tax free, provided he or she is a US citizen. There are limits on spousal gifts when the spouse is not a citizen.You are not required to report the tax-free gifts on your tax return, but you must report taxable gifts whose value exceeds the annual tax-free limit on IRS Form 709 for the year you make them. The tax becomes due when the cumulative total exceeds $1 million.However, the law setting the $1 million limit is set to expire at the end of 2010. Unless Congress acts before that date, the lifetime tax-exempt limit will fall back to $675,000.


Gilt-edged security

When the term gilt-edged is applied to bonds, it's the equivalent of describing a stock as a blue chip. Both terms mean that the issuing corporation has a long, strong record for meeting its financial obligations to its investors. That includes making interest and dividend payments on time and redeeming bonds on schedule.


Global depositary receipt (GDR)

To raise money in more than one market, some corporations use global depositary receipts (GDRs) to sell their stock on markets in countries other than the one where they have their headquarters. The GDRs are issued in the currency of the country where the stock is trading. For example, a Mexican company might offer GDRs priced in pounds in London and in yen in Tokyo. Individual investors in the countries where the GDRs are issued buy them to diversify into international markets. GDRs let you do this without having to deal with currency conversion and other complications of overseas investing. However, since GDRs are frequently offered by newer or less-known companies, the prices are often volatile and the stocks may be thinly traded. That makes buying GDRs riskier than buying domestic stocks.


Global fund

Global, or world, mutual funds invest in US securities as well as those of other countries. In that way, they differ from international funds, which invest only in non-US markets. Although global funds may keep as much as 75% of their assets invested in the US, fund managers are able to take advantage of opportunities they see in various overseas markets.


Go long

When you go long, you buy a security or other financial product that you intend to hold for a period of time or one that you expect to increase in value so that you can sell it at a profit. Going long is the opposite of going short, which means you sell an investment, usually because you expect it to decline in value in the near future. If you're buying and selling options or futures contracts, you go long when you enter a contract to buy and you go short when you enter a contract to sell.


Go public

A corporation goes public when it issues shares of its stock in the open market for the first time, in what is known as an initial public offering (IPO). That means that at least some of the shares will be held by members of the public rather than exclusively by the investors who founded and funded the corporation initially or the current owners or management.


Go short

When you enter a futures contract that commits you to sell or deliver the underlying product, you go short or have a short position.You're also going short when you write an options contract, giving the buyer the right to exercise the contract. With stocks, you go short when you borrow shares of stock through your broker and sell them at their current market price. In contrast, you go long when you enter a futures contract to buy, when you purchase an options contract, or buy a stock either to hold in your portfolio or sell at some point in the future.


Gold standard

The gold standard is a monetary system that measures the relative value of a currency against a specific amount of gold. It was developed in England in the early 18th century when the scientist Sir Isaac Newton was Master of the English Mint. By the late 19th century, the gold standard was used throughout the world. The US was on the gold standard until 1971, when it stopped redeeming its paper currency for gold.


Good 'til canceled (GTC)

If you want to buy or sell a security at a specific price, you can ask your broker to issue a good 'til canceled (GTC) order. When the security reaches the price you've indicated, the trade will be executed. This order stays in effect until it is filled, you cancel it, or the brokerage firm's time limit on GTC orders expires. A GTC, also called an open order, is the opposite of a day order, which is automatically canceled at the end of the trading day if it isn't filled. In addition, some firms offer good through month (GTM) or good through week (GTW) orders.


Good faith deposit

A good faith deposit is a sum of money provided by a buyer to a seller, which demonstrates the buyer’s intention to purchase. For instance, if you’ve decided on a home you want to buy, you generally make a good faith deposit to support your bid. A good faith deposit, also called a binder or earnest money, is usually a fixed amount that’s standard in the community where you’re buying. It's different from a down payment. That’s a larger cash payment, figured as a percentage of the purchase price, which you make when you sign the contract to purchase the property. If you and the seller can’t agree on the terms of the sale, you generally get your good faith deposit back.


Good faith estimate

A good faith estimate is a written summary provided by your mortgage lender. It shows the amount you can expect to pay at your real estate closing to cover all the fees and expenses that are part of arranging your mortgage loan. It includes, among other things, the title search and title insurance, lawyers’ fees, transfer taxes, and filing fees. The total amount of a good faith estimate is in addition to the down payment you will make.


Good will

When the term good will is used in connection with evaluating a company, it covers the intangible value of its reputation, its satisfied clients, and its productive work force. Those factors are all considered evidence of the corporation's potential to produce strong earnings.


Government bond

The term government bond is used to describe the debt securities issued by the federal government, such as US Treasury bills, notes, and bonds. They're also known as government obligations.You can buy and sell these issues directly using a Treasury Direct account or through a broker. Treasurys are backed by the full faith and credit of the US government, and the interest they pay is exempt from state and local, though not federal, income taxes. The cash raised by the sale of Treasurys is used to finance a variety of government activities. Debt instruments issued by government agencies are also described as government bonds, or government securities, though they are not backed by the government’s ability to collect taxes to pay them off. For example, bonds issued by the Government National Mortgage Association (Ginnie Mae) and the Tennessee Valley Authority (TVA) are government bonds.


Government National Mortgage Association (Ginnie Mae)

The Government National Mortgage Association, known as Ginnie Mae, guarantees mortgage-backed securities issued by approved private institutions and marketed to investors through brokerage firms.The agency's dual mission is to provide affordable mortgage funding while creating high-quality investment securities that offer safety, liquidity, and an attractive yield. Ginnie Mae securities are backed by mortgages that are insured by either the Federal Housing Administration (FHA) or the Rural Housing Service (RHS), or guaranteed by the Department of Veterans Affairs (VA). Ginnie Mae securities are sold in large denominations — usually $25,000. But you can buy Ginnie Mae mutual funds, which allow you to invest more modest amounts. Ginnie Mae is an agency of the US Department of Housing and Urban Development (HUD).


Grace period

A grace period is the number of days between the date a credit card issuer calculates your new balance and the date your payment is due. In most cases, if you have paid the previous balance in full and on time, and you haven’t taken any cash withdrawals, no finance charges are added to the amount of your purchases. If you generally pay the entire balance due on time, you may want to choose a card with a longer rather than a shorter grace period, assuming the other terms are comparable. That gives you more time to be sure your payments arrive on time. However, a minority of credit arrangements include a minimum finance charge, even if you do pay on time. Other lenders go back two billing cycles and will add finance charges if you have not paid the full amount due each time. The grace period on a student loan allows you to defer repayment so that the first installment isn't due until six or nine months after you graduate or are no longer enrolled at least half time. The timing depends on the type of loan.You also have a grace period in which to pay the premium on an insurance policy before the policy is cancelled. It's usually one month after the due date.


Green fund

A mutual fund that selects investments based on a commitment to environmental principles may be described as a green fund. Not all green funds stress exactly the same values. A fund that seeks environmentally friendly businesses — say those that use alternative fuels — may not be concerned about what those companies manufacture. Another fund may avoid any company in what it considers an unacceptable industry, despite the company's individual environmental record. In every case, the fund's approach is described in its prospectus.


Green shoe clause

A green shoe clause allows the group of investment banks that underwrite an initial public offering (IPO) to buy and offer for sale 15% more shares at the same offering price than the issuing company originally planned to sell.The clause is activated if demand for shares is more enthusiastic than anticipated and the stock is trading in the secondary market above the offering price. But if demand is weak, and the stock price falls below the offering price, the syndicate doesn’t exercise its option for more shares.This contract provision, which may be acted on for up to 30 days after the IPO, gets its name from the Green Shoe Company, which was the first to agree to sell extra shares when it went public in 1960.


Gross domestic product (GDP)

The total value of all the goods and services produced within a country's borders is described as its gross domestic product. When that figure is adjusted for inflation, it is called the real gross domestic product, and it's generally used to measure the growth of the country's economy. In the United States, the GDP is calculated and released quarterly by the Department of Commerce.


Gross margin

Gross margin, sometimes called gross profit, is the percentage by which profits exceed production costs. To find gross margin you divide sales minus production costs by sales. For example, if you want to calculate your gross margin on selling handmade scarves, you need to know how much you spent creating the scarves, and what you collected by selling them.If you sold 10 scarves at $15 a piece, and spent $8 per scarf to make them, your gross margin would be 46.7%, or $150 in sales minus $80 in production costs divided by $150. Gross margin is not the same as gross profit, which is simply sales minus costs. In this example, it’s $70, or $150 minus $80. If you’re doing research on a company you’re considering as an investment, you can look at the gross margin to help you see how efficiently it uses its resources. If the company has a higher gross margin than its competition, it can command higher prices or spends less on production. That might mean it can allocate more resources to developing new products or pursuing other projects.


Gross national product (GNP)

The gross national product is a measure of a country’s economic output — the total value of all the goods and services that it produces in a particular year. The GNP is similar to the gross domestic product (GDP), but not exactly the same.Unlike the GDP, the GNP includes the income generated by investments owned outside the country by its citizens, and excludes any income earned on domestic soil by noncitizens or organizations based elsewhere.


Gross spread

In an initial public offering (IPO), the gross spread is the difference between what the underwriters pay the issuing company per share and the per share price that investors pay. It's usually about 7%. For example, if a stock is to be offered to the public at $10 a share, the underwriters may pay the issuing company around $9.30 per share. With millions of shares being sold, the 70 cents per share adds up to millions of dollars for the investment bank.


Growth

Growth is an increase in the value of an investment over time. Unlike investments that produce income, those that are designed for growth don't necessarily provide you with a regular source of cash. A growth company is more likely to reinvest its profits to build its business. If the company prospers, however, its stock typically increases in value.Stocks, stock mutual funds, and real estate may all be classified as growth investments, but some stocks and mutual funds emphasize growth more than others.


Growth and income fund

Growth and income mutual funds invest in securities that provide, as their name suggests, a combination of growth and income. This type of fund generally funnels assets into common stocks of well-established companies that pay regular dividends and increase in value at a regular, if modest, rate. The balance of the fund's portfolio is in high-rated bonds and preferred stock.


Growth rate

A growth rate measures the percentage increase in the value of a variety of markets, companies, or operations. For example, a stock research firm typically tracks the rate at which a company’s sales and earnings have grown as one of the factors in evaluating whether to recommend that investors purchase, hold, or sell its shares. Similarly, the rate at which the gross domestic product grows is a measure of the strength of the US economy.If you want to compare the vigor of entities or elements of different sizes, it’s more accurate to look at growth rate than it is to look at the actual numerical change in value. For example, an emerging market might be growing at a much faster rate than a developed one even though the size of those economies is vastly different.


Guaranteed investment contract (GIC)

A guaranteed investment contract, or GIC (pronounced gick), promises to preserve your principal and to provide a fixed rate of return when you begin to withdraw from the contract, typically after you retire. You can invest in a GIC through a salary reduction plan, such as a 401(k) or 403(b) sponsored by your employer, provided that investment option is offered.Because of their fixed rates, GICs are vulnerable to inflation. And you may have to pay a penalty if you decide to change from a GIC to a different investment. Insurance companies that offer GICs assume the risk that the rate they earn on their investments will outperform the rates they've guaranteed on the GICs.


Guaranteed renewable policy

Your insurance company can’t cancel a guaranteed renewable life insurance policy as long as you pay the premium on time. With this type of policy, your payments can be increased only if they’re raised for everyone with the same policy. Today, all newly issued policies are guaranteed renewable.


Guarantor

If lenders are concerned about your income, your credit history, or other risk factors when you apply for a loan, they may require a guarantor, or cosigner.The guarantor signs the loan with you and agrees to pay your debt if you default. For example, lenders may fear that your income may not be high enough to meet your payments if you encounter any unexpected financial setbacks.Laws governing who may serve as a guarantor vary from state to state. Some states require that your guarantor be a resident of the state where you’re obtaining the loan, while others will accept guarantors from out of state as well.


Guardian

A guardian is someone you designate to be legally responsible for your minor children or other dependents who are unable to take care of themselves if you are unavailable to provide for their care. You may name the guardian in your will or while you are still alive. In most cases, a guardian makes both personal and financial decisions for his or her ward. However, you may name two guardians with different areas of responsibility — perhaps one for financial matters if you have a substantial estate. If you become disabled or otherwise unable to manage your own affairs, the appropriate court in your state may name a guardian to manage your affairs.


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