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.
Garmen-Kohlhagen option pricing model
A widely used model for pricing foreign currency options.
GEMs (growing-equity mortgages)
Mortgages in which annual increases in monthly payments are used to reduce outstanding principal and to shorten the term of the loan.
General cash offer
A public offering made to investors at large.
General obligation bonds
Municipal securities secured by the issuer’s pledge of its full faith, credit, and taxing power.
A partner who has unlimited liability for the obligations of the partnership.
A partnership in which all partners are general partners.
Generally Accepted Accounting Principals (GAAP)
A technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time.
Refers to the characteristics and/or experience of the total universe of a coupon of MBS sector type; that is, in contrast to a specific pool or collateral group, as in a specific CMO issue.
Risk that arises when an issuer has policies concentrated within certain geographic areas, such as the risk of damage from a hurricane or an earthquake.
Geometric mean return
Also called the time weighted rate of return, a measure of the compounded rate of growth of the initial portfolio market value during the evaluation period, assuming that all cash distributions are reinvested in the portfolio. It is computed by taking the geometric average of the portfolio subperiod returns.
A reverse repurchase agreement between mortgage firms and securities dealers. Under the agreement, the firm sells federal agency-guaranteed MBS and simultaneously agrees to repurchase them at a future date at a fixed price.
British and Irish government securities.
The loss in yield that occurs when a block of bonds is swapped for another block of lower-coupon bonds. Can also be referred to as “after-tax give up” when the implications of the profit or loss on taxes are considered.
Bonds that are designed so as to qualify for immediate trading in any domestic capital market and in the Euromarket.
A mutual fund that can invest anywhere in the world, including the U.S.
Tendency toward a worldwide investment environment, and the integration of national capital markets.
GMCs (guaranteed mortgage certificates)
First issued by Freddie Mac in 1975, GMCs, like PCs, represent undivided interest in specified conventional whole loans and participations previously purchased by Freddie Mac.
Mortgage-backed securities (MBS) 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.
When the Fed offers to buy securities, to sell securities, to do repo, or to do reverses, it solicits competitive bids or offers from all primary dealers.
Publicly owned stock in a firm is replaced with complete equity ownership by a private group. The shares are delisted from stock exchanges and can no longer be purchased in the open markets.
Gold exchange standard
A system of fixing exchange rates adopted in the Bretton Woods agreement. It involved the U.S. pegging the dollar to gold and other countries pegging their currencies to the dollar.
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 1870-1914.
Compensation paid to top-level management by a target firm if a takeover occurs.
Good ’til canceled
Sometimes simply called “GTC”, it means an order to buy or sell stock that is good until you cancel it. Brokerages usually set a limit of 30-60 days, at which the GTC expires if not restated.
Excess of the purchase price over the fair market value of the net assets acquired under purchase accounting.
Government National Mortgage Association (Ginnie Mae)
A wholly owned U.S. government corporation within the Department of Housing & Urban Development. Ginnie Mae guarantees the timely payment of principal and interest on securities issued by approved servicers that are collateralized by FHA-issued, VA-guaranteed, or Farmers Home Administration (FmHA)-guaranteed mortgages.
Government sponsored enterprises
Privately owned, publicly chartered entities, such as the Student Loan Marketing Association, created by Congress to reduce the cost of capital for certain borrowing sectors of the economy including farmers, homeowners, and students.
Negotiable U.S. Treasury securities.
Graduated-payment mortgages (GPMs)
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 are gradually increased 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.
Graham-Harvey Measure 1
Performance measure invented by John Graham and Campbell Harvey. The idea is to lever a fund’s portfolio to exactly match the volatility of the S and P 500. The difference between the fund’s levered return and the S&P 500 return is the performance measure.
Graham-Harvey Measure 2
Performance measure invented by John Graham and Campbell Harvey. The idea is to lever the S&P 500 portfolio to exactly match the volatility of the fund. The difference between the fund’s return and the levered S&P 500 return is the performance measure.
A mechanism of issuing MBS wherein the mortgages’ collateral is deposited with a trustee under a custodial or trust agreement.
Purchases and sales of eurobonds that occur before the issue price is finally set.
Situation in which a large block of stock is held by an unfriendly company, forcing the target company to repurchase the stock at a substantial premium to prevent a takeover.
Option that allows the underwriter for a new issue to buy and resell additional shares.
Gross domestic product (GDP)
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.
Interest earned before taxes are deducted.
Gross national product (GNP)
Measures and economy’s total income. It is equal to GDP plus the income abroad accruing to domestic residents minus income generated in domestic market accruing to non-residents.
Gross profit margin
Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold.
The fraction of the gross proceeds of an underwritten securities offering that is paid as compensation to the underwriters of the offering.
Group of five (G-5)
The five leading countries (France, Germany, Japan, United Kingdom, 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 G-5 countries plus Canada and Italy.
Group rotation manager
A top-down manager who infers the phases of the business cycle and allocates assets accordingly.
A constant stream of cash flows without end that is expected to rise indefinitely.
A money manager who seeks to buy stocks that are typically selling at relatively high P/E ratios due to high earnings growth, with the expectation of continued high or higher earnings growth.
Opportunity to invest in profitable projects.
Compound annual growth rate for the number of full fiscal years shown. If there is a negative or zero value for the first or last year, the growth is NM (not meaningful).
Common stock of a company that has an opportunity to invest money and earn more than the opportunity cost of capital.
Guaranteed insurance contract
A contract promising a stated nominal interest rate over some specific time period, usually several years.
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a single premium, to pay the principal amount of a predetermined annual crediting (interest) rate over the life of the investment, all of which is paid at the maturity date.