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.

See: Current Assets; Current Liabilities; Fundamental Analysis; Long Term Debt; Price/Earnings Ratio; Technical Analysis; Undervalued

Grantor
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.

See: Call Option; Premium Income; Put Option

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.

See: Bear Market; Liquidity

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.

See: Fully Valued; Overvalued; Speculation; Undervalued

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.

See: Takeover

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.

See: Underwrite

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.

See: Consumer Price Index; Deflation; Economic Growth Rate; Inflation; Producer Price Index; Recession

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

See: Broker; Commission; Registered Representative

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.

See: Earned Before Taxes

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.

See: Investment Banker; Spread; Underwriter

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.

See: Institutional Investor; Underwrite

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.

See: Appreciation; Bear Market; Bull Market; Growth And Income Fund; Growth Stock; Money Market; Mutual Fund

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

See: Growth Fund; Growth Stock

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.

See: Dividend; Growth And Income Fund; Growth Fund; Growth Stock Theory; Price/Earnings Ratio; Risk

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.

See: Dividend; Fundamental Analysis; Growth Stock

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."

See: Day Order; Good Through; Limit Order; Limit Price; Open Order; Stop 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.

See: Debenture; Debt Instrument; Principal; Unsecured Debt

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.

See: Debenture; Liquidation; Unsecured Debt

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.

See: Covered Put Option; Option Writer; Put Option

Gun Jumping
1: The act of soliciting buy orders in an underwriting before an SEC registration is effective.

See: Underwrite

2: Trading securities based on inside information.