Financial Glossary – W

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Wage – in business, a wage is the money that an employer pays an employee for work done. Wages are calculated on an hourly, daily, weekly or monthly basis, as opposed to salaries, which are calculated monthly or annually. Sometimes wages are linked to production, i.e. piece rate. The article also briefly explains some other non-business meanings of the term.

Wage Drift – the difference between the basic wage bill and the final earnings bill. Not every month is the same – one month employees in a company or industry may work a lot of overtime, while in another month there may be very little or no overtime at all. Apart from overtime, bonuses, profit share, and other financial benefits that are added to workers’ basic pay determine how big or small the wage drift is.

Wage ratio – the ratio between the top salaries in a company and its bottom salaries. If a CEO earns $2,000,000 per year, and the average worker pay in the company is $50,000, the wage ratio is 20:1. The term pay ratio has the same meaning.

Wage Theft – the illegal practice of withholding wages from an employee. It also includes not paying them overtime when they work extra hours, and other violations of workers’ rights.

Wager – can be a verb or a noun, and means ‘a bet’ or ‘to bet’. For example, if I say “In yesterday’s horse race I put a cash wager of $100 for GoldFinger to win,” it means “I bet $100 on Goldfinger in yesterday’s horse race.”

Waiver – a voluntary surrender or relinquishment of a known right or privilege. It may refer to the action itself or a document that states it. In insurance, a waiver is a supplementary clause or agreement, attached to a policy, that excludes it from specific losses, limits the amount that may be claimed, or extends cover to include extra items (that are not included in the list of a standard policy).

Wallet – a small, flat case used for keeping paper money in, as well as bank cards, loyalty cards, small documents, business cards, driving licence, and maybe some form of photo ID. Wallets are generally made of fabric or leather, most of them are pocket sized and foldable (not always). An e-wallet is a software program that helps us shop and make payments online.

Wall Street Crash – America’s most severe stock market crash in its history. In October 1929, share prices crashed, and continued declining for several years. It caused the Great Depression, which lasted right up to the beginning of WWII (1939).

Warehouse – a large, usually plain-looking building used for storing goods before they are sent to shops, exported, imported, sold or used. A warehouse may refer to a retail outlet, as in: “I purchased this dining room furniture from a huge furniture warehouse 2 miles out of town.”

Warehousing – this word has two meanings. 1.Everything to do with keeping goods and materials in a warehouse; unloading and loading them from trucks, trains, airplanes, etc. 2. Gradually and surreptitiously purchasing shares in a company over time with the aim of eventually acquiring it completely. This is often an illegal activity, especially if you do not declare a more than 5% stake in your target company.

Warrant – can mean: 1. A security that entitles the holder to buy shares in a named company at a certain price up to a specified date. 2. A legal writ (authorization) – issued by a court – that gives the holder the right to search a premises/person (search warrant) or arrest an individual or people (arrest warrant). 3. A certificate of appointment which is issued to a non-commissioned officer in the military. 4. In philosophy, it refers to the justification for holding a belief.

Warranty – a written guarantee, pledge or promise, issued by the manufacturer, supplier, retailer, or distributor of a good or service that any defect or flaw will be repaired, the item will be replaced, or the consumer will be refunded. The promise has a time limit. In contracting, a warranty is either an implied or expressed understanding that certain facts related to a subject matter in the contract are true or will happen.

Wash Sale – a sale of poorly-performing stocks, bonds or options (securities) at a loss and repurchase of the same securities or very similar ones within thirty days. Investors used to use the wash sale strategy to try and recognize a tax loss, while in fact their position had not changed. Tax authorities in several countries introduced new rules which mean that the loss can no longer be claimed.

Wash Trade – a kind of market manipulation in which traders buy and sell the same financial instrument at the same time. This is often done to give others the impression that the security is in greater demand than it actually is. During the Libor Scandal, some participants were doing this. The term may also be referred to as round trip trading.

Water Pollution – the contamination of bodies of water such as aquifers, oceans, rivers, lakes, and groundwater. Pollutants are either directly or indirectly discharged into water bodies without water treatment being able to remove the harmful compounds fast enough. Some studies have shown that we are now using our oceans as dumping grounds.

Waterfall Payment – a system of paying back debts in which the higher-tier lenders (senior creditors) receive principal and interest payments from the borrower – in full – first, while the lower-tiered lenders (subordinate creditors) get paid after. The subordinate lenders will get nothing if there is not enough money to fully meet the obligations with the senior lenders.

Wave Damage Insurance – insurance coverage against damage to an insured property from high waves or tides.

Wealth – the term has several meanings. In general, it refers to tangible and intangible items that make countries, towns, companies, households, and individuals better off – richer. In accounting, it refers to all assets minus liabilities, i.e. net worth. In economics, the assets of a country, for example, are those economic units that generate income or have the potential to one day generate income.

Wealth Effect – a theory which states that people spend more when the value of their property or investment portfolios increase in value. When the value of our bonds, stocks, property or other assets appreciate, we feel richer, and go out or online and spend more. It is the opposite of the negative wealth effect – when we spend less because our assets have declined in value – we feel poorer.

Wealth of Nations – a magnus opus (great work) of Scottish economist Adam Smith; published in 1776. In his work, known formally as ‘An Inquiry into the Nature and Causes of the Wealth of Nations’, Smith laid the foundations of what is known today as classical free market economic theory. Economists call Smith the ‘Father of modern economics’.

Wealth Tax – a tax on the possessions of individuals who have a high net worth. It contrasts with income tax, which is levied on how much we earn. Wealth tax is a tax on our assets, including our cash, bank accounts, stocks and shares, bonds, properties, airplanes, cars, jewelry, antiques, works of art, etc. In most cases, wealth tax has brought in a disappointingly small amount of revenue for the government.

Wear and Tear – the damage to an item when it is used properly and ordinarily over a period of time. Wear and tear is the expected and normal deterioration in the quality of something that happens over time. In a warranty issued by a manufacturer, the term is used to mean that the product will be repaired, replaced, or the consumer will get his or her money back if it deteriorates more than expected over a given period.

Web – also called the World Wide Web or WWW, is an information system that uses the Internet as a medium. It allows documents to be connected to other documents through hypertext links. Through the web, online users can search for data by moving from one document to another. The Internet is a network of networks, where hundreds of millions of computers are connected to each other, while the web is a system on the Internet for the sharing of documents (websites and web pages) and linking them to each other.

Website – also called a site, is a virtual location on the Web which contains at least one webpage and data files that online users can access through a browser such as Chrome, Explorer, Firefox or Safari. Each website has its own unique web address (URL). Website data is stored (hosted) in a server. A server is a computer that communicates with other computers. The terms webpage and website may be written as two words: ‘web page’ and ‘web site’.

Weighting – a statistical technique used in surveys in which an average is emphasized more than other data items that make up a summary or a group. If, for example, the sample population in a survey is not representative of the general populations – maybe there are too many young people – the respondents will be ‘weighted’ so that the results are not biased or inaccurate.

Weightless Economy – part of our economy with abstract products; things that have commercial value but we cannot touch because they have no mass. Information, ideas, knowledge and services make up the weightless economy. During the industrial revolution, nearly all innovation involved heavy physical products, such as locomotives, textile machinery, etc. Today, most economic growth occurs within the weightless economy.

Weight of Evidence – or WoE (WofE), refers to the persuasiveness and credibility of information presented as fact – how compelling it is – in many cases in comparison to other evidence. The term may be used when there are just two sides to an issue, or when there are more than two issues.

Welfare – this word has several meanings. 1. Government assistance in the form of money for vulnerable, poor or disadvantaged people. 2. The availability of resources and conditions needed to keep a human mentally and physically healthy, secure and comfortable. 3. Economic surplus. 4. Welfare Economics is a branch of economics that uses microeconomic techniques.

Welfare Economics – a subfield of economics that looks at how things affect human welfare and social conditions. Also known as economics with a heart, it includes the redistribution of wealth, making sure everybody has access to good education and healthcare, as well as other essential services.

Welfare State – a system in which the state undertakes to protect and maintain the well-being and health of all is citizens. People at the bottom of the socioeconomic ladder are entitled to financial help and other benefits. Health care and education are provided free of charge for all citizens. The welfare state emerged after World War II.

West Texas Intermediate (WTI) – a trading classification of crude oil and one of the most commonly used benchmarks in oil prices, alongside Brent Crude.

Wet Loan – a mortgage in which the money is released before all the documentation regarding the loan is completed. In the US, some states forbid wet loans. This type of loan is useful in a ‘seller’s market’, when the buyer needs to act rapidly. It is the opposite of a ‘dry loan’.

Wetting Ability – the ability of a liquid to spread evenly over another surface, rather than beading up. If you pour mercury onto a surface, you will see lots of mercury beads – mercury has extremely low wetting ability. Engine oil, on the other hand, will spread evenly – it has very high wetting ability. Water is somewhere in between mercury and engine oil; it has medium wetting ability.

Wharf – a level quayside area where ships may moor for loading, unloading, boarding, and disembarking. It is a man-made structure built in a harbor to provide berthing space for sea vessels. There are two possible plural forms: wharves or wharfs.

Wheel of Retailing – a major hypothesis regarding how retailers develop. According to the hypothesis, a newcomer will enter the market selling cheap items, has low status, and accepts tight margins. Gradually, that retailer raises prices and moves upmarket, until eventually it is an upscale seller. Then a newcomer arrives, sells at low prices, the upmarket retailer is vulnerable, and has to reduces prices.

Whipsaw – in financial English, the term refers to losses made by traders when they purchase a security or currency, expecting it to move one way, for example ‘up’, but it suddenly and unexpectedly moves the opposite way. When this happens and the trader incurs a big loss, we say he or she was been whipsawed. This occurs more often when the market is volatile.

Whisper Number – the unofficial and unpublished earnings per share forecast for a company whose shares are listed in a stock market. An investment house, website, or other financial firm gets the ‘gut feelings’ plus expert opinions of people in the investment community, and pass on this data – the whisper number – to its preferred clients, or in the case of a website, its paying subscribers. The whisper number contrasts with the consensus estimate, which is published.

Whistleblower – also written whistle-blower or whistle blower, is a person who reveals to the public unethical, improper, or criminal activity within a company, organization, government department or agency. In the majority of cases, the whistleblower works where the improper activity was witnessed. In the advanced economies today, and about fifty other countries, whistleblowers are protected by law – this was not the case a few decades ago.

White Collar – refers to a job type in which the worker does mental, non-manual, clerical/administrative work – in an office. A white collar employee typically works behind a desk and/or with computers. Blue collar workers use their hands, they do not work in an office, while pink collar workers (North America only) are women who work in the service sector.

White Elephant – something that was extremely expensive to create and requires a great deal of money to maintain. A white elephant is an expensive loss maker, nobody wants it.

White Goods – also known a major appliances, are large home appliances such as refrigerators, freezers, washing machines, air conditioners and dishwashers. Traditionally, they have been manufactured with a white-enamel surface, hence the term. Today, white goods can be purchased in virtually any color. They contrast with brown goods, which include TVs, radios, computers, and video game consoles.

White Knight – a company that comes in during a hostile takeover attempt and places a bid for the target company. The target company prefers the white knight to the black knight (the hostile bidder). A white knight may also be a company that steps in and saves another company from total collapse.

White Shoe Firm – a leading firm, typically based in Boston or New York, that has been around for at least a century, represents a Fortune 500 company, and used to be populated mainly by WASPs (White Anglo Saxon Protestants). The term originates from a type of white shoe worn by WASPy Ivy League students.

Whole Life Insurance a type of insurance which provides coverage throughout the policyholder’s lifetime – there is not set period. Premiums are generally fixed. In contrast with term life insurance, this type of insurance has a cash value which acts as a savings component and allows an individual to build up tax-deferred savings.

Wholesale Banking – the practice of borrowing and lending money on a very large scale. Unlike retail banking where small amounts of money are lent to individual customers, wholesale banking transactions are massive. Customers include governments, giant corporations, pension funds, and other financial institutions.

Wholesale Energy – the buying and selling (trading) of energy products in the wholesale market by energy producers as well as retailers. Banks and other trading houses use the wholesale markets to optimize assets, speculate on price movements, provide liquidity, and manage risk.

Wholesale Inventories – stock levels in warehouses. If stock levels are high, it means that retail demand (demand in shops) has been weak, conversely, if stock levels are low, demand in shops has been high. The US Census Bureau published the country’s wholesale inventories figures every month.

Wholesale Price – also known as the trade price, is the price that wholesalers charge for the goods that they sell to retailers. There are three price levels in an economy: 1. Produce Price – what manufacturers/farmers charge wholesalers. 2. Wholesale Price – what wholesalers charge retailers (shops). 3. Retail Price – what consumers pay in the shops.

Wholesaler – a person or company that buys goods in bulk from producers and sells them in smaller batches to retailers or other businesses, but never to consumers (people going shopping). The wholesaler is the middleman. The wholesaler buys each unit at a very low price from the producer, and sells them at a higher price to the retailer, who then sells them on at an even higher price to the consumer.

Wide-Body Aircraft – a jetliner (passenger jet airplane) whose fuselage is wide enough to accommodate two passenger airlines, i.e. it is a twin-aisle aircraft. This type of aircraft has from 7 to 10 seats across (abreast), compared to a narrow-body aircraft, which has a maximum of six. Wide-body aircraft are made by Airbus, Boeing, McDonnell Douglas, Ilyushin, and Lockheed.

Wide Economic Moat – a significant edge – a strong competitive advantage – that a company has over its rivals. A wide economic moat may consist of patents for high-selling products that have many years to go before they expire, state-of-the-art technology, or an excellent brand image. A wide moat tells investors that the company will thrive for many years to come. The term comes from moats that surrounded medieval castles to protect them against attacks by rivals and enemies.

Wide Market – a market with significant profit margins or a wide spread. The term is most commonly used in investment markets. When the spread – the difference between the bid and ask prices – is wide, there is a wide market. Wide markets tend to have less trading activity than ‘thin markets’.

Wi-Fi – a technology which allows smartphones, laptops, computers, tablets, video game consoles, printers, digital audio players, and other devices to communicate with the Internet without the need for cables or extra telephone lines. Wi-Fi devices use the same type of waves that microwave ovens do.

Wiki – a website whose content is created, edited and updated by the people who visit it. The users continuously change the website’s landscape. Ward Cunningham developed the first wiki in the 1990. The word means ‘quick’ in Hawaiian.

Wildcard – this term has several possible meanings. 1. The wildcard in a pack of playing cards may match any number, character, suit or value in a game – it is at the discretion of the player who holds it. 2. In sports, it may refer to an opportunity or invitation to compete in a tournament without having to go through the qualifying rounds or have achieved a specific ranking level. 3. In computing, a wildcard character is one that represents other characters, phrases, or numbers. In a Google search, you can use an asterisk (*) to represent several different possibilities. 4. A wildcard may be a person, thing, or event that is unpredictable or surprising.

Wildcat Business – a business venture where the possible outcomes are massive profits or the loss of the entire investment. If you are considering investing in a wildcat business, apart from wondering how much money you could make, remember that you are putting your whole investment at risk.

Wildcat Drilling – involves drilling for oil or gas in areas that geologists do not know much about – they are unproven or unexplored. Wildcat drilling is a very high risk venture, where investors can either make a great deal of money or lose their entire investment.

Wildcat Strike – a strike which has not been supported or authorized by the striking workers’ union. It is an unexpected, sudden strike which is technically illegal. In most of the advanced economies, employers have the legal right to fire workers involved in a wildcat strike.

Will and Testament – a document in which a people state where all their money and possessions should go after they die. It lists the names of individuals, organizations, charities, and other entities – known as the ‘beneficiaries‘. If you die without a will, you are said to be ‘intestate’. The terms ‘testament’, ‘last will and testament’, or simply ‘will’ have the same meaning.

Willful Default – or willful misconduct occurs when somebody deliberately fails to adhere to the terms of an agreement or contract. If I have plenty of money but fail to pay my monthly loan repayments, I do this on purpose and know it is wrong, I am guilty of willful default – I am a willful defaulter.

Willie Sutton Rule – also known as Sutton’s Law, states: 1. In Business – that you should seek out the most profitable activities. Go where the money is. 2. In Management Accounting – we should try to find savings in the most costly activities. 3. In Medicine – it refers to the principle of going straight to the most likely diagnosis, rather than looking at every single possibility. The term was named after something that Willie Sutton – a famous American bank robber – supposedly said.

Willingness to Pay – or WTP, is the most a consumer will buy something for. It contrasts with willingness to accept (WTA), which is the least a seller will sell something for. In marketing, knowing what consumers’ willingness to pay is, is crucial.

Wilshire 5000 – is an index that tracks the returns of virtually every US-based company that is quoted in a major stock exchange, such as the American, New York, or NASDAQ stock exchanges. Although it is not as well-known as the major US stock exchanges, it is the largest index by market value in the world. It is also known (more formally) as the Wilshire 5000 Equity Index, and is often referred to as the Total Stock Market Index.

WiMAX – is a type of wireless technology that provides Internet connectivity over significantly longer distances than standard WiFi does. WiMax, which stands for Worldwide Interoperability for Microwave Access, never became as popular as some experts at the beginning of this century had expected.

Wind Energy – capturing energy from moving air – wind – and converting it into electricity. Wind energy is renewable energy. We have been using it for thousands of years.

Windfall Gains – unexpected large amounts of money that we receive or win. If I won $10 million on the lottery it would be a windfall gain, as would a sizable inheritance. A windfall profit is a type of windfall gain if somebody bought something and then sold it for much more than he or she had expected. For example, if I sell a property during an incredible boom month, and make a huge profit, that is a windfall profit.

Windfall Profits – huge profits that businesses or individuals make unexpectedly. The giant profits are always the result of unusually-favorable circumstances for the seller. To be a windfall profit, the amount of money made needs to be considerably greater than the historical norm. Generally, when there are windfall profits, they are experienced by the whole industry (not always).

Winding up – is a way of shutting down a company by selling off its assets, paying off creditors, and distributing the net assets (whatever is left over). The net assets may be distributed in cash or kind. Liquidation has the same meaning. Dissolution is the final stage when winding up a company.

Window Dressing – is what accountants and portfolio or mutual fund managers do to make things look better than they really are. In accounting, it means the same as creative accounting. Accountants will deliberately position and date things in the books so that the company appears much more profitable that it really is. Mutual fund and portfolio managers typically sell off their badly-performing stocks and purchase high-flying ones just before the end of a quarter or financial year. In most cases, the practice is not illegal, but is frowned upon.

Window of Opportunity – a very short period which should be exploited if you want a desirable outcome. If the window of opportunity, also called a margin of opportunity or critical window is not seized, it will be gone as will that desirable outcome. The term is used in business, science, medicine, and everyday life.

Windstorm – a storm market by high wind and little or no rain. Most types of windstorms, such as cyclones and hurricanes, are not usually covered in standard homeowners’ insurance properties if they live in susceptible areas.

Winner’s Curse – being the winner is not always best; sometimes it is better to lose. The term refers to the hazards you face as a winner if, for example, you won a contract by offering prices that were far too low, or succeeded in bidding for something in an auction, but paid too much for it.

Winner-Takes-All Market – a market where the top player, or top few players, receive a disproportionate share of the total reward available. The rest of the competitors are left with extremely little. The term – winner-takes-all market – may refer to people, products or services.

Win-Win – a term used in game theory in which everybody wins. In a win-win negotiation involving two people, both parties come out on top – there are no losers. This contrasts with a zero-sum (win-lose) situation – with one winner and one loser – or a lose-lose situation – where everybody loses.

Wireless Application Protocol – or WAP, is a suite of emerging standards to enable end users view mobile devices such as tablets and mobile phones – mobile Internet applications. The wireless application was created in 1997, when the WAP Forum was formed by Unwired Planet, Ericsson, Nokia and Motorola. The convergence of wireless communications and the Internet has had a dramatic effect on the number of people going online with their mobile communication devices and the explosion of e-business and e-commerce.

Wireless LAN –  also called WLAN, is an IT term that refers to a LAN (local area network) that does not need cables to connect different devices such as laptops, smartphones, tablets, printers, etc., hence the term ‘wireless’. Instead of using physical wires, communication is achieved through radio waves and IEEE. 802.11.

Wireless Technology – technology that allows people or devices to communicate without using cables or wires. Wi-Fi and cellular networks, for example, are types of wireless technologies. The term also refers to being able to recharge smartphones and other devices without having to plug them in, i.e., without wires or cables.

Witness – the term has several meanings. 1. Somebody who testifies under oath in court during a trial. 2. A person who saw an event first hand. 3. An individual who observes somebody else signing a document or contract and signs it, attesting that the signatory was there. As a verb, ‘to witness’ means to see something happen first hand, or to be present when somebody is signing something and confirming it is their signature and they are who they say they are.

Wolfe Wave – a price action pattern made up of up to five waves that show supply and demand as price heads toward an equilibrium price. Forex traders, stock market speculators, and other investors are forever trying to identify and use Wolfe Waves to predict future prices. The Wolfe Wave was discovered (not invented) by Bill Wolfe, an S&P trader more than twenty years ago.

Word by Word – a system of alphabetizing lists in which the first word in a multiple-word entry determines where the term comes in the list. For example, when entering multiple-word terms whose first word is San or Santa, all the multiples with San are entered first, as in: San Cristobal, San Diego, San Victor and Santa Barbara. In a letter by letter system, on the other hand, the space between the two words is ignored, and the terms would be entered in this order: San Cristobal, San Diego, Santa Barbara and San Victor (santabarbara comes before sanvictor).

Word Processor – a term that refers to either software that people use for writing letters, documents, articles etc. on a computing device, or the hardware, such as computers and typewriters. Mechanical word processors – typewriters – have been around for hundreds of years. The most common word processing software is Microsoft Word, which was first launched in 1983.

Word of Mouth Marketing – also known as WOMM, is a marketing technique which encourages satisfied customers to talk about the product or service they purchased. It is considered the best form of promotion of a good, service, or brand. Even though the term ‘word of mouth advertising’ is commonly used with the same meaning, advertising involves payment. In cases of word of mouth marketing, the satisfied customer who comments on the product is not paid.

Words of Art – terms or expressions that are specific to a certain profession, activity, sport, or subject. A word of art (jargon) may have a different meaning when used within a profession from its use by lay people. For example, a cabbage is a vegetable in lay English, but in the medical profession it is a heart bypass.

Work – this word can have many different meanings. As a noun, it can mean an activity that requires mental and physical exertion in order to obtain a result, a job, one’s hours of employment, a task that has to be undertaken, a painting (work of art), or materials used in the workplace (he took his work home). As a verb or phrasal verb there are dozens of possible meanings.

Workaround – a way of successfully carrying out a task or achieving something when the planned or traditional way of doing it does not work. It is generally a temporary strategy – the cause or root of the problem is not dealt with; it is circumvented.

Work Cell – also written as one word ‘Workcell’, is a group of workers, machines, and other materials needed to perform a specific task. Work cells are used in many different types of organizations, especially manufacturing plants, in order to boost productivity, reduce costs, and minimize errors.

Working Capital – a measurement of how much operating liquidity an entity has. It is a measure of a firm’s liquidity, efficiency and overall health.

World Bank – a financial institution managed by the United Nations that offers loans to poor and emerging economies for capital projects. Formed after WWII, its initial aim was to finance the reconstruction of Europe and Japan.

World Health Organization – or WHO, is a UN specialized agency that is dedicated to international public health. It works with 194 Member States across six different regions.

World Trade Organization – or WTO, is a global organization that deals with the rules and regulations of international trade. It helps countries resolve international trade disputes. The organization says it aims to help the suppliers of products and services, importers, and exporters optimize how they do business.

W-Shaped Recovery – a chart that shows two declines and recoveries in the economy; back-to-back dips and rises in economic activity. A W-shaped recovery, also known as a W-shaped recession, occurs during periods of extremely volatile economic activity – usually when interest rates and inflation fluctuate wildly.