Dr. Harvey's Financial Glossary

Saturday, February 11, 2012

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Grace period: The time period stipulated in most loan contracts and insurance policies during which a late payment will not result in default or cancellation.
Graduated call writing: Selling covered call options at incrementally rising exercise prices, so that as the price of the underlying stock rises and the options are exercised, the seller receives a higher average price than the original exercise price.
Graduated lease: 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.
Graduated payment: Repayment terms calling for gradual increases in the payments on a closed-end obligation. A graduated payment loan usually involves negative amortization.
Graduated security: A security that has moved from listing on an exchange of less prominence to one of more prominence.
Graduated-payment mortgage (GPM): 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.
Graham and Dodd method of investing: An investment strategy based on security analysis and identification. Investors buy stocks with undervalued assets speculating that these assets will appreciate to their true value.
Graham-Harvey Measure 1: performance_measurement developed by John Graham and Campbell Harvey. The idea is to lever a fund's portfolio to exactly match the volatility of the S&P 500. The difference between the fund's levered return and the S&P 500 return is the performance_measurement.
Graham-Harvey Measure 2: performance_measurement developed 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.
Grandfather clause: 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_clause or restriction.
Grandfathered activities: Nonbank activities, some of which would normally not be permissible for bank holding companies and foregin 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: The issuance of an award under a stock plan, such as a stock option or shares of restricted stock.
Grant Date: The date on which an option or other award is granted.
Grantor: A trader in the options market who makes premium income by selling options.
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.
Grantor trust: A mechanism of issuing MBS wherein the mortgages' collateral is deposited with a trustee under a custodian_bank or trust agreement.
Graveyard market: Bear market in which investors who sell are faced with substantial losses, while potential investors prefer to stay liquid; that is, to keep their money in cash or cash equivalents until market conditions improve.
Gray knight: In a merger or acquisitions, 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 list: Formal roster of stocks that can be traded by the block desks, but not in risk arbitrage because an investment bank is involved with the company on nonpublic activity (e.g., mergers and acquisitions defense). A stock's presence on this list should never be conveyed to anyone outside the trading area, much less outside the firm. See: Restricted list.
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 call: Used in the context of general equities. Potential customer who may have an interest in participating in a particular trade if customer's past inquiry or activity is any indication.
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.
Greenmail: The holding of a large block of stock of a target company by an unfriendly company, with the object of forcing the target company to repurchase_of_stock at a substantial premium to prevent a takeover.
Greenshoe option: Option that allows the underwriter for a new issue to buy and resell additional shares.
Gross domestic product (GDP): The market value of final 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.

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