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Glossary |
Glossary 0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z - G -Ginnie Mae. See GNMA. GNMA See Government National Mortgage Association. Golden Parachute. A plan devised by existing management stipulating that an acquiring company has to pay executives of the acquired company a substantial sum of money in the event of removing the former. Government National Mortgage Association ("Ginnie Mae"). A government-owned corporation that purchases mortgages and re-packages them as pass-through securities. The holder of a pass-through bond owns a portion of the underlying mortgages. Greenmail In a typical greenmail, the acquiring firm has already purchased a number of shares of the target firm's stock. Management of the target company offers to buy back the stock, at a price higher than the market. Growth Stocks Stocks of companies that have an opportunity to invest in projects that earn more that the required rate of return. 0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z - H -Hurdle Rate The minimum required return on a project. Hedging The purchase or sale of a derivative security (such as options or futures) in order to reduce or eliminate risk associated with undesirable price changes of another security. Horizontal Merger Merger between two companies that produce similar products. Also referred to as horizontal integration. Horizontal Integration When firms in the same industry merge. Also referred to as horizontal merger Hostile Takeover A merger or acquisition in which management resists the group initiating the transaction. 0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z - I -Income Stocks Companies with high dividend yield or no NPV > 0 opportunities. Incremental Cash Flows
Indenture The legal agreement between the firm issuing the bond and the bondholders, providing the specific terms of the loan agreement. Index A yardstick to measure change from a base year. Index Funds Mutual funds whose objective is to replicate the performance of an index. The most popular equity index is the S&P 500.
Inflation A general increase in prices of goods and services. Inflationary Premium (IP) Additional compensation over the T-bill that levers require to compensation them for the risk of expected inflation. Inflation-Indexed Bonds
Inside Market The highest bid and the lowest offer prices among all competing dealers in a Nasdaq security, i.e., the best bid and offer prices. Insiders These are directors and senior officers of a corporation -- in effect those who have access to inside information about a company. An insider also is a shareholder who owns more than 10 percent of the voting shares of a company. Interest Rates
Interlocking Directors When competing companies (say, IBM and Apple) have a common Board of Directors. This is illegal in the US but is common practice in Japan. Intermediaries See Financial Intermediaries Internal Financing Financing projects through retained earnings. International Diversification
In-the-money Options An option that would be worth exercising if it expired immediately. Also see out-of-the-money options. Investment Banks are firms that assist companies in initial sale of securities in primary market. Investment Company A company that uses its capital to invest in other companies. There are two types: the closed-end and the open-end, or mutual fund. Investment-Grade Bonds Bonds rated Baa or above. IP (Inflationary Premium) Additional return required to compensate asset holders for inflation uncertainty. IPO (Initial Public Offering) Securities are offered for the first time to the public.
0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z - J -Junk Bond A bond that is not of investment quality, with rating below BBB. 0-9|A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|Y|Z - K -Keiretsu Japan's industrial structure. |
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