See: Dividend

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 Although the principles were established by the Accounting Principles Board, the board has since been superseded by the Financial Accounting Standards Board (FASB), a self-regulatory organization.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.

See: Alpha

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.

See: Trading Range

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 takover. These stocks do not have any significant involvement in the target corporation or in its industry. Hence, they have no real reason to rise.

See: Arbitrage; In Play; Rumortrage; Takeover

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.

See: Market Order; Stop Order

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.

See: Federal Reserve Board; Margin Account; Regulation T

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

See: Financial Statement

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.

See: Discharge of Lien

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.

See: Broker Loan Rate; Margin Account; Underwrite

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.

See: General Mortgage Bond; Liquidation

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.

See: Debt Security; General 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.

See: Full Faith And Credit; Municipal Bond

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.

See: Fiduciary; Limited Partnership

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.

See: Blue Chip; Dividend

Ginnie Mae
Nickname for the Government National Mortgage Association.

See: 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.

See: Government National Mortgage Association; Half-Life; Institutional Investor; Principal

Glamor Stock
Stocks that achieve a wide following by consistently producing rising sales and earnings over a long time period. In a bull market, glamor stocks usually rise faster than the overall market. A glamor stock may also be categorized as a blue chip stock. However, it is often distinguished by a higher earnings growth rate.

See: Blue Chip; Bull Market

Global Mutual Fund
A mutual fund that invests anywhere in the world, including within the United States.

See: Mutual Fund

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 Maes 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.

See: Federal National Mortgage Association; Full Faith And Credit; Ginnie Mae Pass Through; Principal

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.