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Financial Glossary

WACC

See: Weighted average cost of capital.

Waiting period

Time during which the securities and exchange commission (SEC) studies a firm's registration statement. During this time the firm may distribute a preliminary prospectus.

Wallflower

Stock that has fallen out of favor with investors; tends to have a low P/E (price to earnings ratio).

Wall Street

Generic term for firms that buy, sell, and underwrite securities.

Wall Street analyst

Related: Sell-side analyst.

Wanted for cash

A statement displayed on market tickers indicating that a bidder will pay cash for same day settlement of a block of a specified security.

Warehouse receipt

Evidence that a firm owns goods stored in a warehouse.

Warehousing

The interim holding period from the time of the closing of a loan to its subsequent marketing to capital market investors.

Warrant

A security entitling the holder to buy a proportionate amount of stock at some specified future date at a specified price, usually one higher than current market. This ``warrant'' is then traded as a security, the price of which reflects the value of the underlying stock. Warrants are issued by corporations and often used as a ``sweetener'' bundled with another class of security to enhance the marketability of the latter. Warrants are like call options, but with much longer time spans -- sometimes years. In addition, warrants are offered by corporations whereas exchange traded call options are not issued by firms.

Wash

Gains equal losses.

Wasting asset

An asset which has a limited life and thus, decreases in value (depreciates) over time. Also applied to consumed assets, such as gas, and termed ``depletion.''

Watch list

A list of securities selected for special surveillance by a brokerage, exchange or regulatory organization; firms on the list are often takeover targets, companies planning to issue new securities or stocks showing unusual activity.

Weak form efficiency

A form of pricing efficiency where the price of the security reflects the past price and trading history of the security. In such a market, security prices follow a random walk. Related: Semistrong form efficiency, strong form efficiency.

Weekend effect

The common recurrent low or negative average return from Friday to Monday in the stock market.

Weighted average cost of capital

Expected return on a portfolio of all the firm's securities. Used as a hurdle rate for capital investment.

Weighted average coupon

The weighted average of the gross interest rate of the mortgages underlying the pool as of the pool issue date, with the balance of each mortgage used as the weighting factor.

Weighted average life

See:Average life.

Weighted average maturity

The WAM of a MBS is the weighted average of the remaining terms to maturity of the mortgages underlying the collateral pool at the date of issue, using as the weighting factor the balance of each of the mortgages as of the issue date.

Weighted average portfolio yield

The weighted average of the yield of all the bonds in a portfolio.

Weighted average remaining maturity

The average remaining term of the mortgages underlying a MBS.

Well diversified portfolio

A portfolio spread out over many securities in such a way that the weight in any security is small. The risk of a well-diversified portfolio closely approximates the systemic risk of the overall market, the unsystematic risk of each security having been diversified out of the portfolio.

White knight

A friendly potential acquirer of a firm sought out by a target firm that is threatened by a less welcome suitor.

Whole life insurance

A contract with both insurance and investment components: (1) It pays off a stated amount upon the death of the insured, and (2) it accumulates a cash value that the policyholder can redeem or borrow against.

Wholesale mortgage banking

The purchasing of loans originated by others, with the servicing rights released to the buyer.

Wi

When issued.

Wild card option

The right of the seller of a Treasury Bond futures contract to give notice of intent to deliver at or before 8:00 p.m. Chicago time after the closing of the exchange (3:15 p.m. Chicago time) when the futures settlement price has been fixed. Related: Timing option.

Window contract

A guaranteed investment contract purchased with deposits over some future designated time period (the ``window''), usually between 3 and 12 months. All deposits made are guaranteed the same credit rating. Related: bullet contract.

Winners's curse

Problem faced by uninformed bidders. For example, in an initial public offering uninformed participants are likely to receive larger allotments of issues that informed participants know are overpriced.

Wire house

A firm operating a private wire to its own branch offices or to other firms, commission houses or brokerage houses.

With dividend

Purchase of shares in which the buyer is entitled to the forthcoming dividend. Related: ex-dividend.

Withdrawal plan

The ability to establish automatic periodic mutual fund redemptions and have proceeds mailed directly to the investor.

Withholding tax

A tax levied by a country of source on income paid, usually on dividends remitted to the home country of the firm operating in a foreign country. Tax levied on dividends paid abroad.

Without

If 70 were bid in the market and there was no offer, the quote would be ``70 bid without.'' The expression ``without'' indicates a one-way market.

Without recourse

Without the lender having any right to seek payment or seize assets in the event of nonpayment from anyone other than the party (such as a special-purpose entity) specified in the debt contract.

With rights

Purchase of shares in which the buyer is entitled to the rights to buy shares in the company's rights issue.

Wi wi

Treasury bills trade on a wi basis between the day they are auctioned and the day settlement is made. Bills traded before they are auctioned are said to be traded wi wi.

Woody

Sexual slang for a market moving strongly upward, as in, ``This market has a woody.''

Working capital

Defined as the difference in current assets and current liabilities (excluding short-term debt). Current assets may or may not include cash and cash equivalents, depending on the company.

Working capital management

The management of current assets and current liabilities to maximize short-term liquidity.

Working capital ratio

Working capital expressed as a percentage of sales.

Workout

Informal arrangement between a borrower and creditors.

Workout period

Realignment period of a temporary misaligned yield relationship that sometimes occurs in fixed income markets.

World Bank

A multilateral development finance agency created by the 1944 Bretton Woods, New Hampshire negotiations. It makes loans to developing countries for social overhead capital projects, which are guaranteed by the recipient country. See: International Bank for Reconstruction and Development.

World investible wealth

The part of world wealth that is traded and is therefore accessible to investors.

Write-down

Decreasing the book value of an asset if its book value is overstated compared to current market values.

Writer

The seller of an option, usually an individual, bank, or company, that issues the option and consequently has the obligation to sell the asset ( if a call) or to buy the asset (if a put) on which the option is written if the option buyer exercises the option.

W-type bottom

A double bottom where the price or indicator chart has the appearance of a W. See: technical analysis.