22.24 ndian onom
the world generate new knowledge and farming big declines in the stock market by delivering a cut
technology for the agriculture sector. Its research in interest rates.
products are “global public goods”, freely available
to all. grey mArket
The ‘unofficial’ market of the newly issued shares
greenshoe option
before their formal listing and trading on the stock
A term associated with the security/share market. exchange.
This is a clause in the underwriting agreement
of an initial public offer (IPO) by a company growth recession
which allows to sell additional shares (usually 15
per cent) to the public if the demand for shares An expression coined by economists to describe an
exceeds the expectation and the share trades above economy that is growing at such a slow pace that
its offering price. It gets its name from the Green more jobs are being lost than are being added. The
Shoe company which was the first company to be lack of job creation makes it ‘feel’ as if the economy
allowed such an option (in the USA, early 20th is in a recession, even though the economy is still
century). This is also known as ‘over-allotment advancing. Many economists believe that between
provision’. 2002 and 2003, the United States’ economy was
in a growth recession.
The company availing this option uses the
proceeds (i.e. from the greenshoe option) to In fact, at several points over the past 25 years
prevent any decline in market price of shares the US economy is said to have experienced a
below the issue price in the post-listing period (in growth recession. That is, in spite of gains in real
GDP, job growth was either non-existent or was
such cases the aforesaid company uses the money
being destroyed at a faster rate than new jobs were
to purchase its own shares from the market—as
being added.
demand increases, the market price of its shares
picks up).
heDge funDs
greshAm’s lAw These are basically mutual funds (MFs) which
invest in various securities in order to contain or
The economic idea that ‘bad’ money forces ‘good’
hedge risks. They are investment vehicles that take
money out of circulation, named after Sir Thomas
big bets on a wide range of assets and specialise in
Gresham, an adviser to Queen Elizabeth I of
sophisticated techniques of investment. They are
England. This law does not apply to the economies
meant to perform well in falling as well as rising
where paper currencies are in circulation. The
markets!
economies which circulate metallic coins (gold,
silver, copper, etc.) of proportional intrinsic values Run by former bankers or traditional
face such situations when people start hoarding investment managers by setting up their own
such coins. funds, they make a lot of money by charging high
fees typically 2 per cent management fees besides
20 per cent of the profits out of the investment.
greenspAn put
As they are unregulated in most of the economies
A financial market terminology named after the (for example the USA, India, specially) and
former chairman, of the US central bank, Federal risky, they accept investments from wealthy and
Reserve, to mean the helpful way he responded to sophisticated investors. Hedge funds made news