Financial Dictionary

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W-Shaped Recovery

An economic cycle of recession and recovery that resembles a “W” in charting. A W-shaped recovery represents the shape of the chart of certain economic measures such as employment, GDP, industrial output, etc. A W-shaped recovery involves a sharp decline in these metrics followed by a sharp rise back to the previous peak, followed again […]

Waiting Period

A. 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”. B. The time between the filing of an insurance claim and the payments made on the claim. Also known as the “elimination […]

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

A slang term referring to setting the corporate cash aside in order to be prepared for capital-intensive investment opportunity, possible acquisition of other company or even for defensive strategy against a takeover attempt.

Warrant

A derivative security issued by the company, entitling the holder the right to purchase specific amount of securities at specified price and within specified time period. Warrants are often issued along preferred stocks or bonds representing incentives, in order to stimulate investors to participate in new debt issue or Initial Public Offering. Warrants enable its […]

Warrant Premium

The amount that an investor must pay above the current market price for a security, when purchasing and exercising a warrant. The warrant premium represents the cost of purchasing a share through the warrant, compared to buying the share directly through the open market. It is calculated as: [(warrant price + exercise price – current […]

Warren Buffett

An American investor, and probably the greatest stock market investor of all time. He is the Chairman of Berkshire Hathaway and its largest shareholder. Magazine “Forbes” ranked him as the third-richest person in the world, with an estimated current net worth of around US$52 billion. In June 2006, he promised to give away over half […]

Wash Sale

An illegal attempt to create false impression of trading activity in order to try to achieve tax loss. When investor buys and sells the same security through two different brokers, he tries to create impression of a loss. This strategy is an illegal attempt to lower the tax burden, which is spotted by the IRS, […]

Wash Sale Rule

An IRS rule that prohibits investor to claim a loss when selling a stock that he bought within 30 days before or after the sale date. This rule is brought into practice because of many investors who tried to claim a loss and achieve tax losses from wash sales.

Watered Stock

Refers to an overvalued stock of a company whose assets have lower value than the issued stock. Value of a watered stock may overthrow value of company assets multiple times because company placed heavy weight upon the par value of the stock due to excessive dividends or overvalued assets.

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 […]

Weather Derivative

A financial instrument used by companies who want to hedge against the weather related risk. Investor who sells a weather derivative bears the risk of a bad weather that could besiege the buyer of the weather derivative. If weather happens to be positive for the buyer, seller collects the profit. However, if the weather turns […]

Wedge

A technical analysis term that refers to a chart pattern on which both peaks and troughs are connected with straight lines. Wedge could be either rising or falling, depending on the direction connecting line is directed. If there is a breakout on the upper line, breakout is considered bullish, and vice versa, if the breakout […]

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 […]

Weighted Average

An average where computing is based on the weight that each component carries in itself. If one fund, for example, consists of 3 stocks where each stock has different percentage in the fund, let’s say 10%, 30% and 60%, and a price of $10, $20 and $30 respectively, than the weighted average stock price in […]

Welfare Economics

A branch of economics that focuses on the optimal allocation of resources and goods and how this affects social welfare. Welfare economics analyzes the total good or welfare that is achieve at a current state as well as how it is distributed. This relates to the study of income distribution and how it affects the […]

Wet Loan

Refers to a mortgage in which funds are acquired before required paperwork is completed. Wet loans are designed in order to expedite the purchasing procedure, but such convenience comes with a price. Wet loans are far more expensive than common mortgages because of high fraud and default potential. Conditions of wet loans use differ between […]

Whipsaw

Refers to a market behavior when security price heads one direction and than suddenly heads in opposite direction. Whipsaw also refers to losing money in volatile markets, when investor buys a security just before rapid dropdown in price or when he sells a security just before rapid rise in price.

Whisper Numbers

Commonly refers to Earnings per Share (EPS) forecasts that are not widely known, but circulate among professional brokers who keep and presents them to wealthy clients. Whisper numbers also refers to expectations of individual investors and their forecasts of future earning of a company.

Whisper Stock

A stock of a company that is rumored to be target of a takeover attempt. Because of these rumors, company stocks are subject to speculations and high volatility, so trading them can bring large profits. Usually, when a takeover attempt is proclaimed, stocks will achieve greater price. Buying them before takeover proclamation will bring you […]

Whole Loan

A single residential or commercial mortgage that a lender has issued to a borrower and that has not been securitized. Whole loan lenders commonly sell their whole loans in the secondary mortgage market to buyers such as Fannie Mae. One reason lenders sell whole loans is to reduce their risk. Instead of holding a mortgage […]

Wide Basis

A situation on the futures markets when the spot price of underlying assets greatly differ from contract’s future price. Wide basis will usually take place when there is a great supply or lack of demand for underlying commodity. Since spot price and future price should come together at contract maturity, wide basis brings arbitrage opportunities.

Widow and Orphan Stock

A stock of an established company that pays large dividends and carries low risk. These stocks are considered very safe investments and are often chosen during bear markets, because these companies are able to keep their dividend payment schedules even throughout difficult economic circumstances.

Wilshire 5000 index

A market capitalization weighted index that tries to track returns of all publicly traded stocks in the United States. Wilshire 5000 index is created in 1974 by Wilshire Associates and is the largest index in the world, measured my market value, comprised of more than 6300 stocks. A company must meet 3 criteria in order […]

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: A. The companies are headquartered in the United States. B. The stocks are actively traded on an American stock exchange. C. The stocks have pricing information that is widely available to the public.