Campbell R. Harvey's Hypertextual Finance Glossary

Copyright © 2002. All Worldwide Rights Reserved. Do not reproduce without explicit permission.

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Fifth letter of a Nasdaq stock symbol indicating that this particular stock is a warrant.
See: Weighted average cost of capital
See: World Equity Benchmark Series
The two-character ISO 3166 country code for WALLIS AND FUTUNA.
See: When issued
The two-character ISO 3166 country code for SAMOA.
Western Samoa Tala currency
Certificate of Foreign Status form required by the IRS to tell the payer, transfer agent, broker or other middleman that an employee is a nonresident alien or foreign entity that is not subject to U.S. tax reporting or backup withholding rules.
Request for Taxpayer Identification Number and Certification form required by the IRS to furnish the payer, transfer agent, broker or other middleman with an employee's social security or taxpayer identification number, in order that the employee not be subject to backup withholding because of under-reporting of interest and dividends on his or her tax return.
A form used to certify a shareholder's social security or tax identification number as true and correct, in order to avoid federal tax withholding.
Wage assignment
A loan agreement provision allowing the lender to deduct payments from an employee's wages in case of default.
Wage-push inflation
Inflation caused by skyrocketing wages.
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.
Waiver of premium
A provision in an insurance policy that allows payment of insurance premiums to be permanently or temporarily stopped in the event the policyholder becomes incapacitated.
Walk away
To take and maintain a position in a stock after going to the floor to consummate a trade. Antithesis of trade me out, buy them back.
Wall Street
Generic term for the securities industry firms that buy, sell, and underwrite securities.
Wall Street analyst
Related: Sell-side analyst
Stock that has fallen out of favor with investors; stock that tends to have a low P/E (price-to-earnings ratio).
A security with no monetary value.
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.
War babies
Slang term for the stocks and bonds of corporations in the defense industry.
War chest
Cash kept aside for a takeover or for defense against a takeover bid.
War Risk Insurance
Separate insurance coverage against loss or damage due to acts of war (including objects left over from previous wars).
Warehouse receipt
Evidence that a firm owns goods stored in a warehouse.
The interim holding period from the time of the closing of a loan to its subsequent marketing to capital market investors.
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 price. Warrants are traded as securities whose price reflects the value of the underlying stock. Corporations often bundle warrants with another class of security to enhance the marketability of the other class. Warrants are like call options, but with much longer time spans-sometimes years. And, warrants are offered by corporations, while exchange-traded call options are not issued by firms.
A guarantee by a seller to a buyer that if a product requires repair or remedy of a problem within a certain period after its purchase, the seller will repair the problem at no cost to the buyer.
Warsaw Stock Exchange
The major securities market of Poland.
Gains equal losses.
Wash sale
Purchase and sale of a security either simultaneously or within a short period of time, often in order to recognize a tax loss without altering one's position. See: Tax selling.
Wasting asset
An asset that has a limited life and thus decreases in value (depreciates) over time. Also applies to consumed assets, such as oil or 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.
Watered stock
A stock representing ownership in a corporation that is worth less than the actual invested capital, resulting in problems of low liquidity, inadequate return on investment, and low market value.
A document (that looks like a bill of lading) issued by a carrier that describes the goods to be transported and that details the shipping particulars. Waybills are issued by both air carriers (air waybills) and ship lines (sea waybills). They merely indicate that the stated goods were received by the carrier for transport, they do not convey title.
Weak dollar
A depreciated dollar with respect to other currencies, meaning that more dollars are needed to buy a unit of foreign currency. Antithesis of strong dollar.
Weak-form efficiency
A pricing theory that the price of a security reflects the past price and trading history of the security. Theory implies that security prices follow a random walk. Related: Semistrong-form efficiency, strong-form efficiency.
Weak market
A market with few buyers and many sellers and a declining trend in prices.
A chart pattern composed of two converging lines connecting peaks and troughs. In the case of falling wedges, the pattern indicates temporary interruptions of upward price rallies. In the case of rising wedges, indicates interruptions of a falling price trend.
Weekend effect
The common recurrent low or negative average return from Friday to Monday in the stock market.
Either Gross Weight, Net Weight, or Tare Weight.
Weighted average cost of capital (WACC)
Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment. Often the weighted average of the cost of equity and the cost of debt The weights are determined by the relative proportions of equity and debt in a firm's capital structure.
Weighted average Coupon
The weighted average of the gross interest rates of mortgages underlying a pool as of the pool issue date; the balance of each mortgage is used as the weighting factor.
Weighted average life
See: Average life
Weighted average maturity
The weighted average maturity of an MBS is the weighted average of the remaining terms to maturity of the mortgages underlying the collateral pool at the date 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 that includes a variety of securities so that the weight of any security is small. The risk of a well-diversified portfolio closely approximates the systematic risk of the overall market, and the unsystematic risk of each security has been diversified out of the portfolio.
When distributed
When issued.
When issued (W.I.)
Refers to a transaction made conditionally, because a security, although authorized, has not yet been issued. Treasury securities, new issues of stocks and bonds, stocks that have split, and in-merger situations after the time the proxy has become effective but before completion are all traded on a when-issued basis. With ice.
Buying stocks just before prices fall and selling stocks just before prices rise in a volatile market, often as the result of misleading signals.
Whisper number or forecast
An unofficial earnings estimate of a company given to clients by a security analyst if there is more optimism or pessimism about earnings than shown in the published number. These are often found on the Internet.
Whisper stock
A stock rumored to be the target of a takeover bid, drawing speculators who hope to make a profit after the takeover is completed.
Whistle blower
A person who has knowledge of fraudulent activities inside a firm or government agency, who is protected from the employer's retribution by federal law.
White knight
A friendly potential acquirer sought out by a target firm that is threatened by a less welcome suitor.
White Noise
The audio equivalent of Brownian motion. Sounds that are unrelated and sound like a hiss. The video equivalent of white noise is "snow" in television reception.
White sheets
Lists of prices published by the National Quotation Bureau for Market Makers.
White-shoe firm
Broker-dealer firms that disdain practices such as hostile takeovers.
White squire
White knight who buys less than a majority interest.
White's rating
A rating of municipal securities, that uses market factors rather than credit considerations to find appropriate yields.
Sale of a large amount of stock by a company that is the target of a takeover bid to a friendly party at below-market prices, so that the raider is forced to buy more of highly priced shares to accomplish the takeover.
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.
Whole loan
A term that distinguishes an investment representing an original mortgage loan from a loan representing a participation with one or more lenders.
Wholesale mortgage banking
The purchasing of loans originated by others, for the acquisition of the servicing rights.
An underwriter or a broker-dealer who trades with other broker-dealers, rather than with the retail investor.
Wholly owned subsidiary
A subsidiary whose parent company owns virtually 100% of its common stock.
A nickname for the Washington Public Power Supply System, which in the 1970s raised billions of dollars through municipal bond offerings, the projects that never materialized. WPPSS defaulted on the payments to bondholders.
Come from when issued. 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
Wide opening
Abnormally wide spread between the bid and asked prices of a security at the opening of a trading session.
Widow-and-orphan stock
A stock paying high dividends with a low beta and noncyclical business, that is an extremely safe investment.
Wiener Börse (Austrian Stock Exchange)
Established in 1771, the major securities market of Austria.
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.
Williams Act
Federal legislation enacted in 1968 (and now constituting Rules 13d and 14d of the Security Exchange Act of 1934) that imposes requirements with respect to public tender offers.
Wilshire indexes
Widely followed performance measurement indexes measuring performance of all U.S.-headquartered equity securities with readily available price data, created by Wilshire Associates, Inc.
Windfall profit
A sudden unexpected profit uncontrolled by the profiting party.
A brokerage firm's cashier department, where delivery of securities and settlement of transactions take place.
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.
Window dressing
Trading activity near the end of a quarter or fiscal year that is designed to improve the appearance of a portfolio to be presented to clients or shareholders. For example, a portfolio manager may sell losing positions so as to display only positions that have gained in value.
Winnipeg Commodity Exchange
Canada's only agricultural futures and options exchange, located in Manitoba.
Winner'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.
Wire room
A department within a brokerage firm that receives customers' orders and transmits the orders to the exchange floor or the firm's trading department.
Wire transfer
Electronic transfer of funds; usually involves large dollar payments.
With Average (W.A.)
Marine cargo insurance coverage providing for partial loss or damage to goods, either with or without a deductible. Also called With particular average.
With dividend
Purchase of shares that entitle the buyer to the forthcoming dividend. Related: Ex-dividend.
With ice
When issued.
With rights
Shares sold accompanied by entitlement the buyer to buy additional shares in the company's rights issue.
Withdrawal plan
Agreement that a mutual fund will disburse automatic periodic redemptions to the investor.
Used in the context of securities, the illegal practice of a public offering participant keeping some shares in a private account or with a family member, employee, or dealer to profit from the higher market price of a hot issue.
Used in the context of taxes, the withholding by an employer of a certain amount of an employee's income in order to cover the employee's tax liability. Also used to refer to the withholding by corporations and financial institutions of a flat 10% of interest and dividend payments due to security holders.
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.
Indicates a one-way market if 70 were bid in the market and there was no offer, the quote would be "70 bid without.".
With Particular Average (WPA)
See: With Average
Without recourse
Giving the lender no right to seek payment or seize assets in the event of nonpayment from anyone other than the party specified in the debt contract (such as a special-purpose entity).
Without Recourse Financing
Financing in which the right of recourse to the party receiving funds is forfeited to the party advancing funds. This may be evidenced by conditions added to the endorsement of a draft being sold by an exporter in order to protect the exporter, if the instrument is not paid at maturity by the original obligor.
Slang to describe a market moving strongly upward, as in, "This market has a woody."
Attempting to complete the remaining part of a trade, by finding either buyers or sellers for the rest.
Working away
Transacting with another broker/dealer.
Working capital
Defined as the difference between 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 deployment of current assets and current liabilities so as to maximize short-term liquidity.
Working capital ratio
Working capital expressed as a percentage of sales.
Working control
Control of a corporation by a shareholder or shareholders having less than 51% voting interest because of the wide dispersion of share ownership.
Working order
Standing order in the marketplace, through which a broker bids or offers to fill the order in a series of lots at opportune times in hopes of obtaining the best price.
Informal repayment or loan forgiveness arrangement between a borrower and creditors.
Workout market
Market indicating prices at which it is believed a security can be bought or sold within a reasonable length of time.
Workout period
Realignment of a temporarily 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 that are guaranteed by the recipient country. See: International Bank for Reconstruction and Development.
World Equity Benchmark Series (WEBS)
The World Equity Benchmark Series are similar to SPDRs. WEBS trade on the AMEX, and track the Morgan Stanley Capital International (MSCI) country indexes. WEBS are available for: Australia, Austria, Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, Malaysia Free, Mexico, the Netherlands, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
World investible wealth
The part of world wealth that is traded and is therefore accessible to investors.
World Trade Organization (WTO)
A multilateral agency that administers world trade agreements, fosters trade relations among nations, and solves trade disputes among member countries.
Wrap account
An investment consulting relationship for management of a client's funds by one or more money managers, that bills all fees and commissions in one comprehensive fee charged quarterly.
A financing device that permits an existing loan to be refinanced and new money to be advanced at an interest rate between the rate charged on the old loan and the current market interest rate. The creditor combines or "wraps" the remainder of the old loan with the new loan at the intermediate rate.
Wraparound annuity
An investment that allows the annuitant the choice of underlying investments tax-deferred.
Wraparound mortgage
A second mortgage that leaves the original mortgage in force. The wraparound mortgage is held by the lending institution as security for the total mortgage debt. The borrower makes payments on both loans to the wraparound lender, which in turn makes payments on the original senior mortgage.
A feature of a new product or security intended to entice a buyer.
Sell an option. Applies to derivative products.
Reducing the book value of an asset if its is overstated compared to current market values.
Charging an asset amount to expense or loss, such as through the use of depreciation and amortization of assets.
Write out
The procedure used when a specialist makes a trade involving his own inventory, on one hand, and a floor broker's order, on the other. The broker must first complete the trade with the specialist, who then transacts a separate trade with the customer.
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.
Writing cash-secured puts
An option strategy to avoid using a margin account. Instead of depositing margin with a broker, a put writer can deposit a cash balance equal to the option exercise price, and can avoid additional margin calls.
Writing naked
See: Naked option
Writing puts to acquire stock
Selling a put option at an exercise price that would represent a good investment by an option writer who believes a stock's value will fall, so that the writer cannot lose. If the stock price unexpectedly goes up, the option will not be exercised and the writer is at least ahead the amount of the premium received. If the stock loses value, as expected, the option will be exercised, and the writer has the stock at what he had earlier decided was originally a good buy, and he has the premium income in addition.
Written-down value
The book value of an asset after allowing for depreciation and amortization.
W-type bottom
A double bottom pattern in a price history that looks like the letter W. See: Technical analysis.

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Copyright © 2002, Campbell R. Harvey. All Worldwide Rights Reserved. Do not reproduce without explicit permission.

[Version October 15, 2002.]

Want to learn more? Join a Duke University Webcast of a real MBA course.

Order the popular hard copy version coauthored with the 2002 Pulitzer Prize winner for financial writing, Gretchen Morgenson of the New York Times.

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