This is a glossary of terms that are, for the most part, unique to the world of financial investigations, or terms that have a different meaning than that which is commonly understood when they are used in this context.

GAAP (Generally Accepted Accounting Principles): Detailed rules and procedures as defined by accepted accounting practices. Although the principles were established by the Accounting Principles Board, the board has since been superseded by the Financial Accounting Standards Board (FASB), a self-regulatory organization.

Gamma Stocks: Class of stocks traded on the London Stock Exchange that are less regulated and only require two market makers quoting indicative prices. Gamma stocks rank third behind Alpha and Beta stocks in terms of capitalization and activity.

Gap: 1) Securities industry term used to depict a security's price movement when its one day's trading range does not overlap the next day's, causing a range (gap) in which no trade has occurred. This usually occurs because of extraordinary positive or negative news about a corporation or a commodity. 2) Financial term representing the dollar amount needed for which provisions have yet to be made. For example, XYZ corporation needs $2.5 million to purchase a new facility. It obtains a loan of $1.25 million and new equity of $750,000. That leaves a gap of $500,000 in which it needs gap financing.

Garbatrage: Traders' lingo--a combination of the words garbage and arbitrage--that represents stocks that rise because of a major takeover. These stocks do not have any significant involvement in the target corporation or in its industry. Hence, they have no real reason to rise.

Gather in the Stops: Trading strategy that entails selling enough shares of a stock to drive its price down to a point where stop orders are believed to be. The stop orders are then activated and become market orders that create movement that activates other stop orders in a process called snowballing. Because this can cause major trading swings, exchange floor officials, if they deem it prudent, have the authority to suspend stop orders in individual securities.

General Account: Federal Reserve Board term for customer's margin account subject to Regulation T (rules governing credit extensions to brokerage customers for the purchase and short sale of securities). The Fed requires that all margin transactions be made in this account.

General Ledger: Formal ledger that includes all the financial statement accounts of a business. It contains offsetting debit and credit accounts.

General Lien: Lien against an individual that gives the right to seize personal property to pay off a debt. The property seized does not have to be the property that causes the debt. The lien does not give the right to seize real property such as land.

General Loan and Collateral Agreement: Also called a "broker's loan," it is an on-going agreement in which broker-dealers borrow money from a bank to buy securities, finance new issue underwriting, carry inventory, or carry customer margin accounts.

Generally Accepted Accounting Principles (GAAP): Detailed rules and procedures as defined by accepted accounting practices. Although the principles were established by the Accounting Principles Board, the board has since been superseded by the Financial Accounting Standards Board (FASB), a self-regulatory organization.

General Mortgage: A mortgage that covers all (blanket) the eligible properties of a borrower and not one particular property. If a liquidation should occur, a blanket mortgage may have a lower priority claim than a mortgage on specific properties.

General Mortgage Bond: A bond that is secured by a blanket mortgage on a corporation's property, but which may be outranked by another mortgage.

General Obligation Bond: Commonly abbreviated as "GO" bond, it is a municipal bond secured by the "full faith and credit" (taxing and borrowing power of the issuer) of the municipality. In comparison to revenue bonds that are repaid from a specific facility (i.e., a sewer system) built with the borrowed funds, a GO bond is repaid with general revenue and borrowings.

General Partner: The partner in a limited or general partnership who is responsible for the management and operation of the partnership. The partner also has a fiduciary responsibility to act for the benefit of the limited partners and, ultimately, any debts taken on by the partnership.

Ghosting: When two or more market makers collectively attempt to influence and change the price of a stock, an illegal practice. Market makers are required by law to act in a competitive nature towards each other. The term arises because individual investors are usually unaware that the usual competition among market makers has been replaced with collusion and manipulation.

Gift Tax: A graduated tax assessed to a donor by the federal government and most state governments when assets are gifted from one person to another. As the gift's value increases, so does the tax rate. The Economic Recovery Tax Act of 1981 permits a donor to give $10,000 a year per recipient free of the federal gift tax ($20,000 to a married couple). The gift tax is calculated on the dollar value of the asset being transferred above the $10,000 exemption level.

Gilt Edged Security: A corporate security that has been established over a period of years so that it earns sufficient profits to pay its bondholders their interest without interruptions. The term can also be used for a stock that pays a reliable dividend. However, the term blue chip is more commonly used when referring to stocks.

Ginnie Mae: Nickname for the Government National Mortgage Association.

Ginnie Mae Pass Through: A security backed by a pool of mortgages and guaranteed by the Government National Mortgage Association (Ginnie Mae). Homeowners make their mortgage payments to the originator of their mortgage. After deducting a service charge, the bank forwards the mortgage payments to the pass-through investors--usually institutional investors or individuals. Ginnie Mae guarantees that investors will receive timely principal and interest payments even if homeowners do not make timely mortgage payments.
Although Ginnie Mae pass-throughs have benefited the home mortgage market (increased capital available for lending), an investor's rate of principal repayment may be uncertain. If interest rates rise, homeowners will hold onto their original mortgages and the principal will be repaid more slowly. If interest rates fall, homeowners will refinance their mortgages at a lower rate and the principal will be repaid faster than expected.

Glamour Stock: Stocks that achieve a wide following by consistently producing rising sales and earnings over a long time period. In a bull market, glamour stocks usually rise faster than the overall market. A glamour stock may also be categorized as a blue chip stock. However, it is often distinguished by a higher earnings growth rate.
Global Mutual Fund: A mutual fund that invests anywhere in the world, including within the United States.

GmbH: A German form of a limited liability corporation.

GNMA (Government National Mortgage Association): Nicknamed Ginnie Mae, a government-owned corporation that is an agency of the Department of Housing and Urban Development. Ginnie Mae’s are pools of residential mortgages. GNMA guarantees, with the full faith and credit of the US Government, that investors will receive full and timely principal and interest payments even if mortgages in the pool are not paid on a timely basis.

GNP (Gross National Product): The total value of goods and services produced by the economy in a given period. It is a primary indicator of an economy's status. "Real GNP" measures economic production that is adjusted for inflation. Real GNP and GNP figures are stated on an annual basis and are updated every quarter.

Go-Go Fund: A mutual fund that invests in highly risky but potentially lucrative stocks. The investments are highly speculative.

Going Ahead: Unethical practice whereby the broker trades for his own account before filling his customers' orders.

Going Away: Bonds bought by dealers for immediate sale to investors, as opposed to being held in inventory for resale at future date. The importance of the difference is that bonds bought going away will not cause adverse pressure on prices.

Going Concern Value: A corporation's value as an operating business as opposed to the value of its assets or its liquidating value. In accounting, going-concern value in excess of asset value is considered an intangible asset and is called goodwill. Goodwill represents the value of a corporation's name, customer service, employee morale, and other such factors that are anticipated to translate into higher earning power. However, as an intangible asset, it does not have a liquidation value and accounting principles require that it is written off over a specific time period.

Going Long: A purchase of a security that creates a "long position." The opposite of going long is "going short," when investors sell a security they do not own and hence, a short position is created.

Going Private: Going from public to private ownership of a corporation's shares. It is usually accomplished by either the company's repurchase of shares or a private investor purchasing the public shares. A corporation will usually go private when its shares are priced considerably below their book value and thus the assets can be bought cheaply. Another reason a company's management may decide to go private is to ensure their own existence by removing the company as a takeover prospect.

Going Public: Industry lingo used to describe the initial sale of shares of a privately held corporation to the public. To fund corporate expansion, a company may go public to raise the needed money. In exchange, the corporation's management gives up some decision-making control to public shareholders. The stock being sold to the public is called an "initial public offering" (IPO).

Going Short: Selling a security that is not owned and hence, a short position is created. An investor who goes short borrows the security from their broker and hopes to buy other shares of the security at a lower price. The investor replaces the borrowed security with the lower priced security. The difference is the investor's profit.

Gold Bond: A debt obligation that is issued by gold-mining companies. The interest payments are determined by gold prices. These bonds are bought by investors who believe gold prices are going to rise. Similarly, silver mining companies issue silver-backed bonds.

Goldbug: An analyst that is smitten with gold as an investment and recommends it as a hedge. Goldbugs are usually anxious about either the world economy, depression or hyperinflation.

Golden Parachute: Lucrative contract that is given to top executives in the event that the company is taken over by another corporation and results in job loss. The contract usually includes a large amount of severance pay, stock options, and a bonus. Golden Parachutes are usually a part of an anti-takeover strategy.

Gold Fix: The daily price setting of gold by selected gold specialist and bank officials in London. The price is fixed at 10:30 am and 3:30 p.m. London time every business day, and is determined by the forces of supply and demand. The gold fix price is used to set the prices of gold bullion, gold-related contracts and products.

Gold Mutual Fund: Mutual fund that invests in gold mining firms. Some funds only invest in US and Canadian firms while others invest in North American and South African firms. Funds investing in South African mines usually pay high dividends because they typically pay out almost all of their earnings as dividends. Gold funds typically perform best during periods of rising inflation. They offer the investor an inflationary hedge, without the risks incurred by investing directly in gold commodities, bullion, or individual gold stocks.

Gold Standard: A monetary system in which currency is convertible into fixed amounts of gold. The US used to be on the gold standard but was taken off in 1971.

Good Delivery Of Securities: Industry lingo meaning that a certificate is endorsed properly, has a signature guarantee and has met other qualifications. The certificates must be in good form to conform with the sale contract so that ownership can be transferred to the buyer. Certificates not in good form are said to be a "bad delivery."

Good Through: Customer order to buy or sell securities at a limit or stop price for specific time period, unless canceled, executed, or changed. It is a type of limit order and may be specified GTW (good-this-week), GTM (good-this-month order), GTC (good-til-canceled), GTC-90 (good-til-canceled for a 90 day period), or for shorter or longer periods.

Good-Til-Canceled Order (GTC): Customer order to buy or sell securities at a limit or stop price that will remain in effect until it is either executed or canceled. If it is not executed, the order can be canceled or changed at any time. Also called an "open order."

Goodwill: An intangible asset that represents the value of a corporation's name, customer service, employee morale, and other such factors that are anticipated to translate into higher earning power. However, as an intangible asset, it does not have a liquidation value and accounting principles require that it is written off over a specific time period.

Government Agency Securities: Also called "agency securities," they are securities issued by US government agencies--for example, the Federal National Mortgage Association. Although agency securities have high credit ratings, they are not government obligations. Hence, they are not directly backed by the full faith and credit of the US government.

Government Bond: Debt obligation of the US Government that are regarded as the highest grade of securities issues.

Government National Mortgage Association (GNMA): Nicknamed Ginnie Mae, a government-owned corporation that is an agency of the Department of Housing and Urban Development. Ginnie Mae’s are pools of residential mortgages. GNMA guarantees, with the full faith and credit of the US Government, that investors will receive full and timely principal and interest payments even if mortgages in the pool are not paid on a timely basis.

Government Obligations: US government debt obligations that the government has promised to repay.

Governments: Securities issued and backed by the full faith and credit of the US government. Examples of such obligations are Treasury bonds, bills, and savings bonds. Because governments are backed by the US government, they are considered the most credit-worthy of all debt instruments.

Government Securities Broker: Any person or company regularly engaged in the business of effecting transactions in government securities for the account of others. The definition does not include corporations that issue securities exempted by the Secretary of the Treasury, corporations that are empowered by law to issue exempt securities, banks or other insured financial institutions.

Graduated Securities: A corporation's security listing that has been upgraded by moving from one exchange to a more notable exchange--for instance, a security's move from a regional exchange to a national exchange. A graduated security usually sees an expansion of its trading volume.

Graham And Dodd Method Of Investing: Investment theory established in the 1930s by Benjamin Graham and David Dodd that is summarized in their book "Security Analysis." Graham and Dodd believed that investors should buy stocks in corporations that have undervalued assets that will inevitably appreciate to their true market value. Graham and Dodd recommended buying stocks in corporations that have current assets exceeding current liabilities, all long-term debt, and a low price/earnings ratio. Analysts who call themselves Graham and Dodd investors search for stocks selling below their liquidating value and do not consider their earnings growth potential.

Grantor: 1) In investments, an options trader who sells a call or a put option and receives premium income for doing so. In the case of a call, the grantor sells the right to buy a security at a specified price. In the case of a put, the grantor sells the right to sell a security at a specified price. 2) A person who creates a trust or transfers real property to another entity. In a U.S. grantor trust, the person responsible for U.S. income taxes on the trust. May have a reversionary interest in a trust.

Grantor Trust: A trust created by a grantor and taxed to that grantor (settlor).

Graveyard Market: Termed a graveyard market because investors who are in the market cannot get out and those who are out have no desire to get in the market. This can happen in a bear market when investors who wish to sell will be faced with large losses and when potential investors prefer to stay liquid until the market improves.

Greater Fool Theory: Believers of this theory feel that even though a stock or the overall market is fully valued, speculation is warranted because there are enough fools (greater fools) to push prices further upward.

Greenmail: An act of buying a corporation's stock, threatening to take control, and then demanding that those shares be purchased back by the corporation--usually at a price higher than can be obtained on the open market. In exchange, the acquirer agrees not to proceed with the takeover bid.

Green Shoe: An underwriting agreement provision stipulating that, in the case of huge public demand, additional shares will be authorized by the issuer for distribution by the syndicate.
Gross National Product (GNP): The total value of goods and services produced by the economy in a given period. It is a primary indicator of an economy's status. "Real GNP" measures economic production that is adjusted for inflation. Real GNP and GNP figures are stated on an annual basis and are updated every quarter.

Gross Per Broker: Gross commission revenues generated by a registered representative during a given time period.

Gross Profits: Also called "gross margin," it is profits earned from the service or manufacturing operation--before the deduction of selling costs and other expenses and before taxes are paid.

Gross Spread: The difference (spread) between a security's public offering price and the price paid to the issuer by an underwriter. The spread consists of the syndicate manager's fee, the underwriter's discount, and the selling concession--the discount offered to a selling group.

Group of Ten: Also known as the "Paris Club," the group consists of Belgium, Canada, France, Italy, Japan, The Netherlands, Sweden, the United Kingdom, the United States, and West Germany. These major industrialized countries try to coordinate monetary and fiscal policies to create a more stable world economy.

Group Sales: Term used in securities underwriting that refers to block sales made by the syndicate manager to institutional investors. The securities come from the syndicate "pot." Credit for the sale is pro-rated amongst syndicate members in proportion to their original allotments.

Growth Fund: A mutual fund that seeks long-term capital appreciation by selecting corporations to invest in that should grow more quickly than the general economy. Growth funds are more volatile than conservative funds such as income or money markets. However, they usually rise more quickly than conservative funds in bull markets and fall more sharply in bear markets.

Growth and Income Fund: A mutual fund whose objective is to seek long-term capital appreciation along with income.

Growth Stock: Stock of a company with earnings' growth at a fairly rapid rate that is anticipated to continue to grow at high levels. Growth stocks are riskier investments than average stocks, however, because they generally have higher price/earnings ratios and make little or no dividend payments to shareholders.

Growth Stock Theory: Theory that corporate stocks should be selected for investment purposes based on the fact that the corporation's earnings and dividends are continuously increasing at a faster rate than the growth of the general economy.

GTC (Good-Til-Canceled): Customer order to buy or sell securities at a limit or stop price that will remain in effect until it is either executed or canceled. If it is not executed, the order can be canceled or changed at any time. Also called an "open order."

Guaranteed Bond: Bond in which principal and interest are guaranteed by an entity other than the issuer. Guaranteed bonds are in effect debenture bonds (unsecured) of the guarantor. However, if the guarantor has stronger credit than the issuer whose bonds are being guaranteed, the bonds have greater value. An example of a guaranteed bond would be in the case of corporate parent-subsidiary relationships where the bonds are issued by the subsidiary with the parent's guarantee.

Guaranteed Stock: Stock in which its dividends are guaranteed by an entity other than the issuer. Guaranteed stock becomes, in effect, debenture (unsecured) bonds of the guarantor.

Guarantee Letter: Letter issued by a bank guaranteeing aggregate payment if a put option is exercised and an assignment notice is presented to the option writer. A guarantee letter covers the put writer thereby making it a covered put.

Gun Jumping: 1) The act of soliciting buy orders in an underwriting before an SEC registration is effective. 2) Trading securities based on inside information.

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