Financial Lexicon: G-L
G
Gross Domestic Product (GDP):
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monetary value of all services provided and finished products made within the borders of a country in a specific time period.
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included components:
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government expenditures
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public and personal consumption
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investments
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paid constructions costs
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exports and imports
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measure of economic activity within a country's borders.
Growth Stock:
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share of a company that either has exhibited or is expected to grow profits faster than the average growth of the market.
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generally do not pay dividends as management focuses on reinvesting profits back into the company to accelerate its growth in the short-term.
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often seen as more expensive due to higher earnings ratio, which can be misleading if company continues to grow rapidly.
Guaranteed Investment Certificate:
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guaranteed investment issued by a Canadian bank or financial institution.
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locked-in deposit earning interest for specified period of time, during which the investment cannot be withdrawn, in most cases.
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can be locked-in for as little as one month up to as much as 5 years, with longer lock-in periods paying higher interest rates.
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more popularly referred to by its acronym - GIC.
H
High-Yield Bond:
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bond that pays higher interest to offset the higher risk of default associated with lending money to that company or government institution.
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assigned to entities with credit rates of BB or lower.
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also known as Junk Bond.
Home Equity Line of Credit:
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revolving loan whereby the equity value of the borrower's home is used as collateral/security.
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permits a homeowner to access and borrow the equity value in an owned property.
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loan proceeds can be used for any purchasing needs, although must follow a repayment of schedule of at least monthly interest but may be more, depending on terms.
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most applications require an appraisal and initial set-up fee to establish the line of credit, though interest rates are generally lower on such lines of credit as opposed to unsecured ones.
I
Initial Public Offering:
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first offering to purchase a corporation's stock on a stock exchange by the general public.
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usually referred to in the media as an "IPO".
Investment Grade Bond:
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corporate or government bond deemed to be of lower risk to default, thus paying lower interest rates.
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assigned to entities with credit ratings between AAA and BBB.
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generally attractive to conservative investors.
J
Joint Tenants With Right of Survivorship (JWTROS):
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legal ownership structure with two or more parties named as owners of a financial account or asset.
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each party has equal right to access and use the asset.
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at death of one party, all surviving parties inherit total value of the deceased party's share, usually without having to take the asset through probate procedures.
Junk Bond:
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see High-Yield Bond.
L
Laissez-Faire Economics or Capitalism:
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philosophy opposing government intervention in economic and business affairs.
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belief that businesses will be better off, and thus, by extension, so too will society prosper, when government involvement in economic matters is kept at a minimum.
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French term for "hands off" or "allow to do".
Liability:
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any financial debt or obligation of monetary value owed by a person, corporation or institution.
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expected to be repaid over time through payment of money, goods and/or services.
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appears on the right side of a balance sheet.
Liquidity:
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ease with which asset or security is quickly bought and sold without significantly disturbing its price.
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level of flexibility in converting security or asset into cash.
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the higher the ease/flexibility, the more liquid the asset is said to be.
Long:
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ownership of a security, with the right to transfer ownership, through sale or gift, to someone else.
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gives owner the right to receive income paid by the security
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bestows the right by the owner to share in the profits or losses associated with changing value.