FINANCIAL DICTIONARY-W

W
A Nasdaq symbol specifying that a particular security is a warrant.

W-2 Form
The form that an employer must send to an employee and the IRS at the end of the year. The W-2 form reports an employee's annual wages and the amount of taxes withheld from his or her paycheck.

W-4 Form
A form completed by an employee to indicate his or her tax situation (exemptions, status, etc.) to the employer. The W-4 form tells the employer the correct amount of tax to withhold from an employee's paycheck.

W-8 Form
An IRS form that grants a foreigner an exemption from certain U.S. information return reporting and backup withholding regulations.
There are many variations of the W-8 form, such as the W-8BEN and W-8ECI.

W-9 Form
An IRS form, also known as "Request for Taxpayer Identification Number and Certification", which is used by an individual defined as a "U.S. person" or a resident alien to verify his or her taxpayer identification number (TIN).
An entity that is required to file an information return with the IRS must obtain your correct TIN to report, for example, income paid to you, real estate transactions, mortgage interest you paid, etc. For example, companies that issue dividends use the W-9 form to verify a shareholder's TIN.

Waiting Period
1. The period of time between filing a registration statement with the SEC and the registration statement being declared effective by the SEC. Also known as the "quiet period" and the "cooling-off period".
2. The time between the filing of an insurance claim and the payments made on the claim. Also known as the "elimination period".

Waiver
The voluntary action of a person or party that removes that person's or party's right or particular ability in an agreement. The waiver can either be in written form or some form of action. A waiver essentially removes a real or potential liability for the other party in the agreement.
Wall of Worry
A phrase used to describe a bullish market trend occurring in the face of negative uncertainties.

Wall Street
1. A street in lower Manhattan that is the original home of the New York Stock Exchange. The street is the historic headquarters of the largest U.S. brokerages and investment banks. Many have since relocated to other areas of Manhattan and the United States. Wall Street was named after the wooden wall Dutch colonists built in this area in 1653 to defend themselves from the British and Native Americans.
2. The collective name for the financial and investment community, which includes stock exchanges and large banks, brokerages, securities and underwriting firms, and big businesses. Some people believe that the interests of these big firms contrast those of smaller businesses, or "Main Street".

Wallflower
A stock that has fallen out of favor with investors and, consequently, tends to trade at a low P/E. Also called orphan stock.

Wallpaper
The name given to stocks, bonds and other securities that have become worthless.

Walrasian Market
An economic model of a market process in which orders are collected into batches of buys and sells and then analyzed to determine a clearing price that will decide the market price. Also referred to as "call market".

War Babies
A name given to securities in companies that are defense contractors. Also known as defense stocks.

War Bond
Debt securities issued by a government for the purpose of financing military operations during times of war. It is an emotional appeal to patriotic citizens to lend the government their money because these bonds offer a rate of return below the market rate.

War Chest
Slang for the reserve of cash a corporation sets aside to attempt a takeover or to defend against a hostile takeover.

Warehouse Receipt
A receipt used in futures markets to guarantee the quantity and quality of a particular commodity being stored within an approved facility.

Warehousing
1. A procedure whereby a company gradually builds up a holding of shares in a company it wishes to takeover in the future.
2. The process of storing goods within a storage facility.

Warrant
A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue as a "sweetener" to entice investors.

Warrant Coverage
An agreement between a company and its shareholders whereby the company issues warrants equal to some percentage of the dollar amount of the shareholder's investment.

Warrant Premium
The premium paid for the rights associated with a warrant.

Warren Buffett
Known as "the Oracle of Omaha", Buffett is Chairman of Berkshire Hathaway and arguably the greatest investor of all time. His wealth fluctuates with the performance of the market, but for the last few years he has been reported to be worth over $30 billion, making him the second richest man in the world.

Wash
A situation in which two events or actions have the effect of nullifying each other. In terms of investment, this could be when the gains in a portfolio equal the losses.

Wash Sale
An illegal transaction an investor makes by simultaneously buying and selling a security through two different brokers, thereby creating the illusion of activity. Investors do this to try and recognize a tax loss without actually changing their position.

Wash Trading
An illegal stock trading practice where an investor simultaneously buys and sells shares in a company through two different brokers.

Wash-Sale Rule
An Internal Revenue Service (IRS) rule prohibiting a taxpayer from claiming a loss on the sale of an investment when the same investment was purchased within 30 days before or after the sale date. Also know as the "30-day wash-sale rule".

Wasting Asset
A derivative security that loses value due to time decay.

Watch List
A list of securities being monitored closely by a brokerage or exchange in order to spot irregularities.

Watered Stock
Stock that is issued with a value much greater than the value of the issuing company's assets. Watered stock can be caused by excessive stock dividends, overvalued assets and/or large operating losses.

Wave
A metaphor for daily market activity that goes against the weekly market tide.

Weak Form Efficiency
One of the different degrees of efficient market hypothesis (EMH) that claims all past prices of a stock are reflected in today's stock price. Therefore, technical analysis cannot be used to predict and beat a market.

Weak Hands
1. The intention of futures contract holders not to receive delivery of the underlying.
2. Retail traders in the forex market who abide by the conventional wisdom that when a pattern is broken, get out.

Weak Sister
A slang term for an undependable or weak link.

Wealth Added Index - WAI
A metric designed by Stern Stewart & Co consulting firm that attempts to measure wealth created (or destroyed) for shareholders by a company. The WAI takes into account more variables than just the profits or share growth of a company. According to this theory, wealth is created only if the returns of a company exceed its cost of equity.

Wealth Management
A professional service which is the combination of financial/investment advice, accounting/tax services, and legal/estate planning for one fee.

Weather Derivative
An instrument used by companies to hedge against the risk of weather-related losses. The investor who sells a weather derivative agrees to bear this risk for a premium. If nothing happens, the investor makes a profit. However, if the weather turns bad, then the company who buys the derivative claims the agreed amount.

Weather Future
A type of weather derivative that obligates the buyer to purchase the value of the underlying weather index - measured in heating degree days (HDD) or cooling degree days (CDD) - at a future date. The settlement price of the underlying weather index is equal to the value of the relevant month's HDD/CDD multiplied by $20. Weather futures can enable businesses to protect themselves against losses caused by unexpected shifts in weather conditions.

Wedge
A technical chart pattern composed of two converging lines connecting a series of peaks and troughs.

Wedging
Technical term referring to how the handle area of a “cup with handle” price pattern moves up over a period of a week, just prior to the “pivot” or buy point. This is not a constructive signal. Proper handles should show a drifting off or a minor downtrend prior to the breakout point. Handles that wedge up tend to indicate a faulty pattern and are prone to failure.

Weekend Effect
A common occurrence in which stock prices tend to be negative Friday through Monday.

Weighted
Figures or components that are adjusted to reflect importance by value or proportion.

Weighted Alpha
A weighted measure of how much a stock has risen or fallen over a certain period, usually a year. Generally, more emphasis is placed on recent activity by assigning higher weights to it than those assigned to earlier movements. This helps to give a return figure that has a greater focus on the most current period and is a more relevant measure for short-term analysis. This technique is popular with technical analysts.

Weighted Average
An average in which each quantity to be averaged is assigned a weight. These weightings determine the relative importance of each quantity on the average. Weightings are the equivalent of having that many like items with the same value involved in the average.

Weighted Average Cost Of Capital - WACC
A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation.
WACC is calculated by multiplying the cost of each capital component by its proportional weight and then summing:

Where:
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate

Weighted Average Credit Rating
The weighted average of all the bond credit ratings in a bond fund. The measure gives investors an idea of how risky a fund's bonds are overall. The lower the weighted average credit, rating the riskier the bond fund. The weighted average credit rating is expressed as a regular letter rating (AAA,BBB, CCC).

Weighted Average Life - WAL
The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, WAL tells how many years it will take to pay half of the outstanding principal.

Weighted Average Market Capitalization
A stock market index weighted by the market capitalization of each stock in the index. In such a weighting scheme, larger companies account for a greater portion of the index. Most indexes are constructed in this manner, with the best example being the S&P 500.

Weighted Average Maturity - WAM
The weighted average of the time until all maturities on mortgages in a mortgage-backed security (MBS). The higher the weighted average to maturity, the longer the mortgages in the security have until maturity. Also known as "average effective maturity".

Well's Notice
Notifications issued by regulators to inform individuals and companies of completed investigations where infractions have been discovered.

West Texas Intermediate - WTI
Light, sweet crude oil commonly referred to as "oil" in the Western world. WTI is the underlying commodity of the New York Merchantile Exchange's oil futures contracts.

Western Account
An offering agreement in which each underwriter in a consortium of underwriters is responsible only for selling its alloted amount of the new issue. Once participants have met their previously agreed upon target allotment sale, their liability in the offering is completed.

When Issued - WI
A transaction which is made conditionally because a security has been authorized, but not yet issued.

Whipsaw
A condition where an investor's security transaction is quickly followed by an opposite reaction. Sometimes referred to as "being whipped".

Whisper Number
1. Traditionally, the unofficial and unpublished earnings per share (EPS) forecasts that circulate among professionals on Wall Street. In this context, whisper numbers were generally reserved for the favored (wealthy) clients of a brokerage.
2. A company's forecasted future earnings or revenues according to the collective expectations of individual investors. In this sense, a whisper number would be compiled by a website polling its visitors. Individuals come up with a whisper number using their own analysis of company financials, market trends, gut feel, etc.

Whisper Stock
Shares in a company that is rumored to be the target of a takeover offer. The source of whisper stocks could be anybody from an investment banker involved in a deal, to the spouse of an executive privy to the information.

Whistle Blower
An employee who has inside knowledge of illegal activities occurring within his or her organization and reports these to the public.
White Elephant
Any investment that nobody wants because it is unprofitable.

White Knight
A company that makes a friendly takeover offer to a target company that is being faced with a hostile takeover from a separate party.

White Paper
An informational document issued by companies trying to promote or highlight the significance of a planned product or service.

White Squire
Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in the target firm.

White-Shoe Firm
Slang for broker-dealers who are strongly against hostile takeover practices

Whitemail
A strategy that a takeover target uses to try and thwart an undesired takeover attempt. The target firm issues a large amount of shares at below-market prices, which the acquiring company will then have to purchase if it wishes to complete the takeover.

Whole Life Insurance Policy
A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component pays a stated amount upon death of the insured. The investment component accumulates a cash value that the policyholder can withdraw or borrow against.

Whole Loan
A term used to distinguish between an original mortgage loan and a pass-through security.

Wholesale Banking
Banking services between merchant banks and other financial institutions.

Whoops
Slang for the Washington Public Power Supply System (WPPSS), which made the record books with the largest municipal bond default in history.

Wide Basis
A condition found in futures markets in which the spot price of underlying commodities is not close to the futures price of the same contract

Wide Open
The situation at the opening of a trading day when there is a wide spread between the bid and ask prices for a security.

Widow-and-Orphan Stock
Relatively low-risk stocks from well-known firms that pay high dividends.

Wild Card Option
An option associated with treasury bond or treasury note futures contracts that permits the short position to delay the delivery of the underlying.

Wild Card Play
Having the right to deliver on a futures contract at the last closing price, even though the contract is no longer trading.

Wildcat Drilling
The process of drilling for oil in an area that has been left unexplored.

Will Variation
A law that allows spouses and children to contest a will if they are not adequately provided for.

William O'Neil + Co., Incorporated
Institutional research firm established in 1963 that created the first daily U.S. equity database based on models of the greatest stock market winners since 1953. Today it provides computerized stock research to over 400 of the largest world-wide institutional investors. Sister company to Investor's Business Daily

Williams %R
In technical analysis, this is a momentum indicator measuring overbought and oversold levels, similar to a stochastic oscillator. It was developed by Larry Williams and compares a stock's close to the high-low range over a certain period of time, usually 14 days.

Williams Act
A federal act, passed in 1968, that defines the rules in regards to acquisitions and tender offers.

Wilshire 5000 Total Market Index - TMWX
A market capitalization-weighted index composed of more than 6,700 publicly-traded companies that meet the following criteria:
1. The companies are headquartered in the United States.
2. The stocks are actively traded on an American stock exchange.
3. The stocks have pricing information that is widely available to the public.

Windfall Shares
Shares given for free to insiders of a society, a firm or a company when that same society, firm or company is undergoing the process of demutualization. Windfall shares are often given to promote goodwill and to encourage the demutualization process.

Windfall Tax
A tax levied by governments against certain industries when economic conditions allow those industries to experience above-average profits. Windfall taxes are primarily levied on the companies in the targeted industry that have benefited the most from the economic windfall.

Winding Up
A process that entails selling all the assets of a business entity, paying off creditors, distributing any remaining assets to the principals, and then dissolving the business.

Window Dressing
A strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders.

Window Settlement
A form of settlement between dealers whereby trades are settled through the physical comparison of transactions and actual money and stocks are transferred.

Winner's Curse
A tendency for the winning bid in an auction to exceed the intrinsic value of the item purchased. Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.
Originally, the term was coined as a result of companies bidding for offshore oil drilling rights in the Gulf of Mexico. In the investing world, the term often applies to initial public offerings.

Winnipeg Commodities Exchange - WCE
A commodities exchange in Winnipeg, Manitoba, that serves as Canada's only agricultural futures and options exchange. Canola is the Winnipeg Commodities Exchange's (WCE) primary commodity, but the WCE also trades contracts on many other commodities and provides the world's only flaxseed futures market.

Wire Fraud
A situation where a person concocts a scheme to defraud or obtain money based on false representation or promises. This criminal act is done using electronic communications or an interstate communications facility.

Wire House
A company whose different branches are linked by a communications system enabling the sharing of financial information, research, and prices.

Wire Transfer
An electronic transfer of funds across a network administered by hundreds of banks around the world.

With Approved Credit - WAC
A condition requiring a purchaser using financing to have adequate credit - as approved by his or her financial lending institution - for the transaction to go through.

With Discretion
A type of limit order that can be modified by a floor broker according to his or her own judgment, allowing him or her to buy or sell to a set point beyond the bounds of the original order. This trading modifier used along with limit and stop orders allows greater customization and flexibility.

Withdrawal
Removing funds from an account, plan, pension or trust. In some cases, conditions must be met in order to withdraw funds without penalization. There are two ways to withdraw money: in cash or in kind.

Withdrawal Plan
1) A payment structure arranged with a mutual fund in which the investor receives a set amount of funds from the fund on a periodic basis. This is also called a "systematic withdrawal plan".
2) Any strategy in which an investor liquidates a portion of their portfolio and extracts cash periodically, such as an investor selling equity shares every year to help supplement their retirement.

Withholding
Any tax that is taken directly out of an individual's wages or other income before he or she receives the funds.

Withholding Allowance
An allowance an individual claims on a W-4 Form. It is mainly used to assist an employer in calculating the amount of income tax to withhold from an employee's paycheck.

Withholding Tax
1. Income tax withheld from employees' wages and paid directly to the government by the employer.
2. A tax levied on income (interest and dividends) from securities owned by a non-resident.

Wolfe Wave
In technical analysis, it is a naturally occurring trading pattern present in all financial markets. The pattern is composed of five waves showing supply and demand and a fight towards an equilibrium price. These patterns can develop over short- and long-term time frames such as minutes or weeks and are used to predict where a price is heading and when it will get there.

Woody
Slang to describe when the market has a strong and quick upward movement.

Work in Progress - WIP
Work that has not been completed but has already incurred a capital investment from the company.

Working Capital
A measure of both a company's efficiency and its short-term financial health. The working capital ratio is calculated as:

Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable, inventory). Also known as "net working capital".
Working Capital Loan
A loan whose purpose is to finance everyday operations of a company.

Working Capital Turnover
A measurement comparing the depletion of working capital to the generation of sales over a given period. This provides some useful information as to how effectively a company is using its working capital to generate sales.

Working Ratio
A ratio used to measure a company's ability to recover operating costs from annual revenue. This ratio is calculated by taking the company's total annual expenses (excluding depreciation and debt-related expenses) and dividing it by the annual gross income:

Workout Market
A market maker prediction as to the trading price range that a security will occupy within a reasonable period of time. The characteristics of a workout market are seen prevalently in thin markets

Workout Period
The period of time in which temporary yield discrepancies between fixed income securities are adjusted

World Gold Council - WGC
A nonprofit association of the world's leading gold producers, established to promote the use of, and thus demand for, gold through marketing, research and lobbying. Headquartered in Geneva, Switzerland, the WGC covers the markets which comprise about three-quarters of the world's annual gold consumption.

World Trade Organization - WTO
An international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably, and freely as possible.

World Wide Web Address
URL Address where a company provides information via the World Wide Web. Information from this address often includes company records, press releases, financial reports, and information regarding products and/or services. The address is hyper-linked to provide a single mouse-click to the company's Web site (a new browser window will open).

WorldCom
Formerly known as WorldCom, now known as MCI, this U.S.-based telecommunications company was at one time the second-largest long distance phone company in the U.S. Today, it is perhaps best known for a massive accounting scandal that led to the company filing for bankruptcy protection in 2002. WorldCom executives effectively fudged the company's accounting numbers, inflating the company's assets by around $12 billion dollars. The swift bankruptcy that followed led to massive losses for investors.

Wrap Account
An account in which a brokerage manages an investor's portfolio for a flat quarterly or annual fee. This fee covers all administrative, commission, and management expenses. Sometimes this also includes funds of funds.

Writ
A formal document written by a judge or official requiring specific action.
Writ Of Seizure And Sale
A court order that permits a creditor to instruct a sheriff to seize and sell assets/property of a debtor in order to payoff a debt.

Write-Down
Reducing the book value of an asset because it is overvalued compared to the market value.

Write-Off
A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues.

Write-Up
An increase made to the book value of an asset because it is undervalued compared to market values.

Writer
The seller of an option who collects the premium payment from the buyer.

Written-Down Value
The book value of an asset after accounting for depreciation and amortization.

WST
In currencies, this is the abbreviation for the Samoan Tala.