Financy Glossary
The online dictionary of financial terms



Gearing ratio

In finance, the gearing ratio shows how encumbered a company is with debt. It will tell you how large the net debt is in relation to the equity capital.

Example #1: This company has a gearing of 65%. That means that the net debt is 65% of the equity capital.

Example #2: The net debt is €2 million and the equity capital is €3 million. The gearing ratio is therefore roughly 67%.

A highly geared company is a company heavily encumbered with debt.


General Mortgage Bond (USA)

In the United States, a General Mortgage Bond is a bond secured by a blanket mortgage on the issuing company’s property.

The mortgage may be outranked by one or more mortgages.


Global Depositary Receipt

A global depositary receipt (GDR) is a negotiable certificate representing ownership of a given number of a company’s shares. A global depositary receipt can be listed and traded.

GDR:s are chiefly used when investors in one country want to invest in a company located in another country. Trading GDR:s instead of actual shares tend to be both easier and less costly.


Going Private

When a publicly traded company stops being a publicly traded company and becomes a private company. Also known as delisting.

Examples of companies that have gone private:

  • Dell Computers went private in 2013. The buyout was carried out by the company’s CEO and Silver Lake Partners. Silver Lake Partners is a private equity firm focused on leveraged buyout and growth capital investments.
  • H.J. Heinz, famous for their ketchup, was delisted from the New York Stock Exchange in 2013 after being acquired by an investment consortium.
  • Alliance Boots was listed on the London Stock Exchange until it was purchased by Kohlberg Kravis Roberts & Co and Italian billionaire Stefano Pessina in 2007. This buyout set a new European record: $22.2 billion.
  • In 2007, Blackstone Group acquired Hilton Worldwide Holdings in a leveraged buyout and delisted it from the New York Stock Exchange.


Going Public

The first time a company makes a public offering of its shares is called Initial Public Offering (IPO) or floating. The IPO (US term) or floating (UK term) converts the company from a private company to a publicly traded company. This is known as going public.

The most common method for an IPO or floating is for the company to sell the shares to institutional investors, who then sell them to the general public on a stock exchange.

The process that leads up to a company going public is typically long and complex. When a company is to be listed on a stock exchange, the process of going public must adhere not just to applicable law but also to the regulations of the specific stock exchange.

Details of the company that is about to go public is typically disclosed in a prospectus. The prospectus will also contain information about the terms and rights attached to the offered security.


Good Till Cancelled Order

This is an order that will remain valid until it is either canceled by the order-giver or executed.

Example: The client gives the broker a good-till-canceled order to buy 25 shares of AT&T for a maximum share price of $50. The broker will keep trying to execute this order until he succeeds or until the client cancels the order, whichever happens first.


Government Securities

Securities issued by a government.

The most well-known example of a government security is the bonds issued by a government to finance public expenditure. It is a way for the government to borrow money.


Granny Bonds (UK)

In the United Kingdom, granny bond is a nickname for a bond issued by the government with pensioners as the intended bond buyers.

The most well-known example of a granny bond is the National Savings Pensioners Guaranteed Income Bond. These bonds are issued by the UK government and can be purchased by peopled aged 60 or above. The interest rate for these bonds is fixed for either one, two or five years, and interest is gross and paid monthly.


Guaranteed Income Bond

A bond where regular income (interest rate payments) from the bond is guaranteed by the issuer of the bond.


Guaranteed Trust

A guaranteed trust is a unit trust that guarantees that the bid price will never be below a certain predefined level. Even if the value of the trust’s assets fall far down, the bid price will not be allowed to fall below the guaranteed level. (Bid price is the amount that an investor can sell his units for.)

Guaranteed trusts will typically “lock in” any growth achieved every few months.