Glossary

GAAP
Abbreviation for Generally Accepted Accounting Principles.

Gamma
The way in which an option's or portfolio's delta changes as the value of the underlying instrument changes.

Gapping
See Jumping.

GATT
Abbreviation for General Agreement on Tariffs and Trade.

GDP
Abbreviation for Gross Domestic Product.

Gearing
a) A measure of indebtedness, ie. the extent of borrowings as against the equity held by a person or company in an asset; b) The ability to increase exposure by investing in futures contracts without making the underlying cash available. (See also Leverage).

General Agreement on Tariffs and Trade (GATT)
Struck in 1947 to reduce international trade barriers and establish fair trading standards, GATT has evolved into a quasi international trade organisation, with 88 member countries and its own offices in Geneva. There have been eight rounds of trade negotiations since GATT was established, the most recent being the Uruguay Round completed in 1993 which reduced barriers to agricultural trade.

Generally Accepted Accounting Principles (GAAP)
A set of accounting rules established and recognised by international accounting authorities.

Geometric Average
A compounded average rate of return that is time weighted for a specified time period. Geometric averages are often used for measuring the performance of an investment portfolio, adjusted for the timing of new deposits and withdrawals.

Gilt Edged
Low risk investments with high security.

Gilts
Domestic bonds issued in the United Kingdom by the United Kingdom Government.

Global Custodian
See Custodian.

GNP
Abbreviation for Gross National Product.

Gold Standard
A monetary system where a country's currency is valued and convertible into a fixed quantity of gold.

Good Funds
Assets that banks are always willing to receive from other banks to represent final payment of claims. Currency and, especially, deposits at the central bank constitute good funds.

Goods and Services Tax (GST)
A tax on individual goods and/or services, which is added on to the retail price of those goods or services. Goods and services taxes are often advocated as a means of increasing savings in the economy as an alternative to income taxes, which are perceived to penalise savings and to reward spending. Also known as Consumption Tax or, in some countries, Value Added Tax.

Government Bank
See Central Bank.

Greenback
A colloquial term for the United States dollar.

Greenmail
A term that describes when a hostile bidder threatens a company with takeover by purchasing a large number of its shares, forcing the management of the company to repurchase the shares at an above market price.

Gross
The total, before deductions have been taken away. (Opposite of Net).

Gross Domestic Product (GDP)
A measurement in dollar terms of the aggregate goods produced and services provided within an economy over a year and excluding income earned outside the country. Considered one of the main yardsticks of the health and vitality of an economy. (See also Gross National Product).

Gross National Product (GNP)
An economic statistic which includes GDP plus any income earned by residents from their overseas investments, minus income earned within the domestic economy by overseas residents.

Group of Seven (G7)
The seven major capitalist powers: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Their finance ministers meet every two years to compare and coordinate monetary policies and exchange rate information.

G7
See Group of Seven.

Growth Assets
A general term for assets such as shares and property, which provide investment returns, (comprising both capital growth and income), which outperform inflation. Growth assets compare to debt securities such as fixed interest and/or cash investments.

Growth Fund
An investment portfolio which aims to achieve an above average rate of after-tax income and capital growth over the medium to longer term, while adopting a medium risk profile. A growth fund typically comprises a balanced portfolio of equities, fixed interest, property and cash.

Growth Investor
One who seeks capital gain from expected further growth in company earnings. Typically, growth investors care less about price/earnings ratios and other valuation measures and more about earnings growth.

GST
Abbreviation for Goods and Services Tax.

Guarantee
A requirement, eg. under a contract, to perform an obligation or to discharge a liability of another party in the event that the party fails to do so itself. The provider of the guarantee is known as the guarantor. Note that in the case of some capital guaranteed products, the guarantee is often only as good as the guarantor's surplus of assets over liabilities. (See also Indemnity). Guarantor The entity, which excepts ultimate responsibility for the repayment of the loan.

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