Glossary

G-7

A formal organization of 7 highly industrialized democracies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

G-8

The G-7 countries plus Russia.

General Agreement on Tariffs and Trade (GATT)

A post-World War II agreement designed to promote freer international trade among the nations of the world. The GATT was replaced by the World Trade Organization (WTO) in 1994.

Generalized Autoregressive Conditional Heteroskedasticity

A time series model in which returns at each instant of time are normally distributed but volatility is a function of recent history of the series.

Generalized System of Preferences (GSP)

A program of tariff preferences for designed to encourage the economic growth of certain developing countries. In accordance with the Generalized System of Preferences (GSP), developed countries let the manufactured and semi-manufactured goods of eligible developing countries enter with either no duty or a lower rate than is applied to other countries.

Generally Accepted Accounting Principles (GAAP)

A common set of accounting concepts, standards, and procedures by which financial statements are prepared.

Geocentric Multinational

A multinational in which the subsidiaries are neither satellites nor independent city states, but parts of a whole whose focus is on worldwide objectives as well as local objectives, each part making its unique contribution with its unique competence.

Global Bond

A bond that trades in the Eurobond market as well as in one or more national bond markets.

Global Economy

The international network of individuals, businesses, governments, and multilateral organizations which collectively make production and consumption decisions.

Global Quota

An import quota set by a nation which specifies the allowed quantity of a product from all countries.

Globalization

A global movement to increase the flow of goods, services, people, real capital, and money across national borders in order to create a more integrated and interdependent world economy.

Gold Exchange Standard

An exchange rate system used from 1925 to 1931 in which the United States and England were allowed to hold only gold reserves while other nations could hold gold, U.S. dollars, or pounds sterling as reserves.

Gold Standard

An exchange rate system used prior to 1914 in which gold was used to settle national trade balances. Also called the “classical gold standard.”

Goodwill

The accounting treatment of an intangible asset such as the takeover premium in a merger or acquisition.

Gradualism

A steady and calculated approach to transforming an economy from communism to capitalism.

Graduation

The point at which a developing country's eligibility for Generalized System of Preferences (GSP) is terminated for the reason of sufficient economic progression.

Gray-market Imports

Gray-market imports are parallel distribution of genuine goods by intermediaries other than authorized channel members.

Greenfield

A Greenfield Investment is the investment in a manufacturing plant, office, or other physical company-related structure or group of structures in an area where no previous facilities exist.

Greenmail

Buying shares on the open market in the hope that the target’s business partners will buy back the shares at inflated prices.

Gross Domestic Product (GDP)

A measure of the market value of goods and services produced by a nation. Unlike Gross National Product, GDP excludes profits made by domestic firms overseas, as well as the share of reinvested earning in domestic firms' foreign-based operations.

Gross National Income (GNI)

Previously known as Gross National Product, Gross National Income comprises the total value of goods and services produced within a country (i.e. its Gross Domestic Product), together with its income received from other countries (notably interest and dividends), less similar payments made to other countries. For example, if a British-owned company operating in another country sends some of their incomes (profits) back to UK, UK’s GNI is enhanced. Similarly, a British production unit of a US company sending profit to the US will affect the British GNI but will not reduce it since it is not included in the first place.

Gross National Product (GNP)

GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens who are working abroad, minus income of non-residents located in that country. It is essentially the measurement of the value of all goods and services produced by a country's citizens regardless of their location. Its difference with Gross Domestic Product (GDP) is that GDP measures the total production within a country regardless of the citizenship of the producer.

Growing Perpetuity

A constant stream of cash flows without end that is expected to rise indefinitely. For example, cash flows to the landlord of an apartment building might be expected to rise a certain percentage each year.

Growth Options

The positive net present value opportunities in which the firm has not yet invested. The value of growth options reflects the time value of the firm’s current investment in real assets as well as the option value of the firm’s potential future investments.

Growth Stocks

Stocks with high price/book or price/earnings ratios. Historically, growth stocks have had lower average returns than value stocks (stocks with low price/book or PE ratios) in a variety of countries.

Guideline Lease

A lease written under criteria established by the IRS to determine the availability of tax benefits to the lessor.

Gulf Cooperation Council (GCC)

A council created in 1981 and composed of Saudi Arabia, Bahrain, Oman, Qatar, Kuwait, and the United Arab Emirates. It is a forum to coordinate and integrate economic policies between these six countries, which account for about 40% of oil in the international market.