CFA® glossary: G

23 terms beginning with G.

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G-spread

A bond's yield minus the yield on a government bond of the same maturity, interpolated where needed. A spread over the government benchmark rather than the swap curve. Where it appears →

Gamma

The rate at which delta changes as the underlying moves. The same for a call and a put, highest for at-the-money options near expiry; long options are long gamma and gain from large moves. Where it appears →

General meeting

The meeting at which shareholders vote on resolutions such as director elections. Most never attend, voting by proxy on materials the company circulates beforehand.

General obligation bond

A non-sovereign government bond backed by the issuer's full taxing power rather than by any single project. Usually a safer claim than a revenue bond from the same issuer.

General partner

In a limited partnership, the partner that runs the business and bears general-partner liability, often through a limited-liability entity. In a private fund it is the manager: it finds, runs and exits the investments and calls capital. Where it appears →

Generative ai

Models that produce new content, such as text, images or code, rather than only classifying or predicting a number. Large language models are the form most used in investment work.

Geometric mean

The average that compounds correctly over time. For a series of returns it is the right summary; the arithmetic mean always overstates once returns vary. Where it appears →

Gift tax

A tax on transfers made during life. Where it is charged only on the amount given, the money paying it is not itself taxed, which can make giving now cheaper than leaving the same sum at death. Where it appears →

Glide path

The planned path by which a portfolio's mix changes over time, such as a target-date fund moving from equities towards bonds as retirement nears, or a pension plan adding liability hedges as its funded status improves.

Global depository receipt

A depository receipt issued outside both the issuer's home market and the United States, often in London or Luxembourg and usually denominated in dollars.

Global investment performance standards

Voluntary, industry-wide standards for calculating and presenting investment performance so that firms' records can be fairly compared. Compliance is claimed by a whole firm, not for a single product. Where it appears →

Goals-based investing

Dividing a client's wealth into sub-portfolios, each invested for one goal with its own horizon and required probability of success. Risk is the chance of missing a goal rather than volatility. Where it appears →

Going concern

The assumption that a business will keep operating for the foreseeable future, on which ordinary financial statements rest. Auditors must flag material uncertainty about it, and value as one usually exceeds liquidation value. Where it appears →

Goodwill

The premium paid over the identifiable net assets of a business acquired. Not amortised, tested for impairment, and writing it down concedes the price was too high. Where it appears →

Greenfield

An infrastructure asset still to be built. It carries construction, cost-overrun and demand risks that fall away once it is running, so it is expected to earn more than brownfield. Where it appears →

Grinold–kroner model

A way to build an equity return forecast from its parts: dividend yield, less the net change in shares outstanding, plus inflation, real earnings growth and any change in the P/E. It shows how much a forecast leans on repricing.

Gross margin

Gross profit over revenue. It answers a question about the product — pricing power and what it costs to make — and nothing about overheads. Where it appears →

Gross merchandise value

The total value of goods sold through a marketplace, most of which belongs to the sellers rather than the platform. Only the platform's take of it is revenue.

Gross profit

Revenue less the cost of the goods or services sold. It measures what the product earns before any overheads, and divided by revenue it gives the gross margin. Where it appears →

Gross return

Return before management fees, custody and other administrative costs are deducted, though after trading costs. It measures the manager's investing, not what the investor received. Where it appears →

Growth accounting

Splitting output growth into contributions from capital, labour and total factor productivity, weighting each input by its share of income. What the inputs do not explain is credited to productivity. Where it appears →

Guideline public company method

Valuing a private company with multiples of similar listed companies, adjusted for differences in size, growth and risk, adding a control premium when valuing a controlling interest.

Guideline transactions method

Valuing a private company with multiples paid in acquisitions of whole similar companies. Control is already in those prices, which may also include synergies particular to certain buyers.