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. 62Dictionary of Finantial and Business TermsLico Reis Consultoria & Línguaslicoreis@terra.com.brGeneric 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.Geographic risk 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 ofgrowth of the initial portfolio market value during the evaluation period, assuming that all cash distributionsare reinvested in the portfolio.It is computed by taking the geometric average of the portfolio subperiodreturns.Gestation repo A reverse repurchase agreement between mortgage firms and securities dealers.Under theagreement, the firm sells federal agency-guaranteed MBS and simultaneously agrees to repurchase them at afuture date at a fixed price.Gilts British and Irish government securities.Ginnie Mae See:Government National Mortgage Association.Give up The loss in yield that occurs when a block of bonds is swapped for another block of lower-couponbonds.Can also be referred to as "after-tax give up" when the implications of the profit or loss on taxes areconsidered.Glass-Steagall Act A 1933 act in which Congress forbade commercial banks to own, underwrite, or deal incorporate stock and corporate bonds.Global bonds Bonds that are designed so as to qualify for immediate trading in any domestic capital marketand in the Euromarket.Global fund A mutual fund that can invest anywhere in the world, including the U.S.Globalization Tendency toward a worldwide investment environment, and the integration of national capitalmarkets.GMCs (guaranteed mortgage certificates) First issued by Freddie Mac in 1975, GMCs, like PCs, representundivided interest in specified conventional whole loans and participations previously purchased by FreddieMac.GNMA-I Mortgage-backed securities (MBS) on which registered holders receive separate principal andinterest payments on each of their certificates, usually directly from the servicer of the MBS pool.GNMA-Imortgage-backed securities are single-issuer pools.GNMA-II Mortgage-backed securities (MBS) on which registered holders receive an aggregate principal andinterest payment from a central paying agent on all of their certificates.Principal and interest payments aredisbursed on the 20th day of the month.GNMA-II MBS are backed by multiple-issuer pools or custom pools(one issuer but different interest rates that may vary within one percentage point).Multiple-issuer pools areknown as "Jumbos." Jumbo pools are generally longer and offer certain mortgages that are moregeographically diverse than single-issuer pools.Jumbo pool mortgage interest rates may vary within onepercentage point.GNMA Midget A GNMA pass-through certificate backed by fixed rate mortgages with a 15 year maturity.GNMA Midget is a dealer term and is not used by GNMA in the formal description of its programs.Gnomes Freddic Mac's 15-year, fixed-rate pass-through securities issued under its cash program. 63Dictionary of Finantial and Business TermsLico Reis Consultoria & Línguaslicoreis@terra.com.brGo-around When the Fed offers to buy securities, to sell securities, to do repo, or to do reverses, it solicitscompetitive bids or offers from all primary dealers.Going-private transactions Publicly owned stock in a firm is replaced with complete equity ownership by aprivate group.The shares are delisted from stock exchanges and can no longer be purchased in the openmarkets.Gold exchange standard A system of fixing exchange rates adopted in the Bretton Woods agreement.Itinvolved the U.S.pegging the dollar to gold and other countries pegging their currencies to the dollar.Gold standard An international monetary system in which currencies are defined in terms of their goldcontent and payment imbalances between countries are settled in gold.It was in effect from about 1870-1914.Golden parachute Compensation paid to top-level management by a target firm if a takeover occurs.Good delivery A delivery in which everything - endorsement, any necessary attached legal papers, etc.- is inorder.Good delivery and settlement procedures Refers to PSA Uniform Practices such as cutoff times on deliveryof securities and notification, allocation, and proper endorsement.Good 'til canceled Sometimes simply called "GTC", it means an order to buy or sell stock that is good untilyou cancel it.Brokerages usually set a limit of 30-60 days, at which the GTC expires if not restated.Goodwill Excess of the purchase price over the fair market value of the net assets acquired under purchaseaccounting.Government bond See: Government securities.Government National Mortgage Association (Ginnie Mae) A wholly owned U.S.government corporationwithin the Department of Housing & Urban Development.Ginnie Mae guarantees the timely payment ofprincipal 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 LoanMarketing Association, created by Congress to reduce the cost of capital for certain borrowing sectors of theeconomy including farmers, homeowners, and students.Government securities Negotiable U.S.Treasury securities.Graduated-payment mortgages (GPMs) A type of stepped-payment loan in which the borrower's paymentsare initially lower than those on a comparable level-rate mortgage.The payments are gradually increased overa predetermined period (usually 3,5, or 7 years) and then are fixed at a level-pay schedule which will behigher than the level-pay amortization of a level-pay mortgage originated at the same time.The differencebetween what the borrower actually pays and the amount required to fully amortize the mortgage is added tothe unpaid principal balance.Graham-Harvey Measure 1 Performance measure invented by John Graham and Campbell Harvey.Theidea is to lever a fund's portfolio to exactly match the volatility of the S and P 500.The difference between thefund'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.Theidea is to lever the S&P 500 portfolio to exactly match the volatility of the fund.The difference between thefund's return and the levered S&P 500 return is the performance measure
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