A W-2 form is a tax form required from employers that reports wages paid and taxes withheld to the Internal Revenue Service (IRS), local state tax authorities and the Social Security Administration. ...

A W-4 form is a standard IRS form an employee uses to report federal taxability status to an employer.An employer is required by law to withhold taxes from an employee's pay based on information r...

The W-8 form is a standard IRS form that exempts non-U.S. citizens from specific federal income taxes.Individuals from abroad who live in the United States frequently work as legal residents and inves...

The W-9 form is a standard IRS form that certifies an individual's Social Security number and taxpayer identification number.Employers and all types of brokers (for example, securities dealers and...

A W-shaped recovery refers to two consecutive cycles of economic decline and growth that graphically resemble the letter "W."A W-shaped recovery graphically expresses what is frequently termed...

A wage assignment refers to a forced payment of a financial obligation via automatic withholding from an employee's pay.Courts can subject individuals who become delinquent in their obligations to...

A wage earner plan, subsequently known as Chapter 13, is a bankruptcy protection scheme that allows income earners to satisfy outstanding debts -- in whole or in part -- within a specific time frame.I...

Also called garnishment, a wage execution is a process under which money owed or paid to a borrower is given to a creditor instead. Let's say John Doe has stopped paying child support to his ex-w...

Wage expense is the total compensation a company pays its employees during a particular accounting period.The compensation a company pays its employees is treated as an expense on its income statement...

A wage garnishment is an obligatory payment of a debt where a portion of an employee's paycheck is automatically withheld to pay the debt.Courts can set wage garnishments on individuals who become...

Also called cost-push inflation, a wage-price spiral is an economic term that describes how prices increase when wages increase. The general idea behind a wage-price spiral is a simple one of supply ...

Also called cost-push inflation or a wage-price spiral, wage-push inflation is an economic term that describes how prices increase when wages increase. The general idea behind a wage-push inflation i...

The waiting period refers to the time period between a company filing a registration statement with the US Securities and Exchange Commission (SEC) and the SEC declaring that statement to be effective...

A waiver is a party's voluntary renunciation of rights in a contractual arrangement.When two parties enter into a contract, they often agree to forfeit some of their respective rights or claims. E...

Under a waiver of demand, a payee assumes responsibility for a check or bank draft that he or she endorses.Sometimes, the bank account a check or bank draft is drawn against does not contain the funds...

A waiver of exemption is a clause in a contract that allows a creditor to seize property that state laws may exempt from seizure. Let's assume 65-year-old John Doe borrows $250,000 to buy a house...

A waiver of notice is an agreement that allows people to conduct certain legal procedures without giving formal notification that he or she is going to do so. For example, let's assume that John ...

A waiver of premium rider is language in an insurance policy that allows the insured to stop making premium payments if he or she becomes ill or disabled. For example, let's assume that John Doe ...

A waiver of subrogation prevents an insurer from seeking payments from third parties that cause losses to the person or business it is insuring. For example, let's say ABC Insurance sells a prope...

In the finance world, a wall of worry is an increasing amount of negative information about a security or about the market. For example, a wall of worry might be information that the economy's GD...

Wall Street is the name used to describe the place in New York City where much of the United States' financial industry is concentrated. The name "Wall Street" is also used frequently used...

Wallflower is slang for a stock that analysts and investors tend to neglect.Usually used to describe individuals who are relegated to the sidelines in social events, in investing, wallflowers are stoc...

Wallpaper is slang for a security with minimal to no market value.Once a security becomes worthless, its hard documentation (for example, its stock certificate) no longer has any practical function. T...

The Walmart effect refers to the economic impact of a large discount retailer on a local market. Named after the large discount retailer, it is used to describe the crowding out and shuttering of smal...

Walras's law is the concept that a surplus in one market indicates the presence of a shortage in another.In 1844, neoclassical French economist Leon Walras posited that the existing markets of the...

War babies are securities issued by companies in the defense industry. Let's assume Company XYZ builds jets for the Navy, and Company ABC builds guns for the Army. Both are public companies, and ...

A war bond is a bond issued to finance war. Let's say that Country X attacks Country Y. Country Y has a smaller military and defense systems, but wants to defend itself. It decides to enlarge its...

A war chest is the cash set aside to deal with unexpected changes in a business environment or to take advantage of a sudden opportunity.Uncertainties, unexpected events and opportunities occur regula...

A war economy centers on producing goods and services that support war efforts. For example, if Country X spends most of its tax dollars on defense and/or uses most of the proceeds from borrowing mon...

Warehouse financing occurs when a lender lends to a borrower who uses inventory as collateral. Let's assume Company XYZ wants to borrow $2 million to expand its operations. It has used up all of ...

Warehouse lending is credit provided to a mortgage lender to fund mortgages until the lender sells them in the secondary market. Let's say John Doe goes to Bank XYZ to borrow $200,000 to buy a ho...

A warehouse receipt is a piece of paper promising that a specific quantity and quality of a particular asset is in a given location. Let's say John Doe buys a coffee futures contract. On October ...

Warehousing is the process of accumulating shares in a company for the purpose of eventually acquiring the firm. Let's say the John Doe Hedge Fund is thinking about acquiring a controlling intere...

A warm card is a bank card that allows the user to make one kind of transaction but not another. For example, let's assume that John works for Company XYZ and he is the manager of the Cleveland, ...

A warning bulletin is a list of credit cards that are reported stolen, canceled or compromised in some way. A warning bulletin is also called a "hot list," "restricted card list" or &...

Warrants are securities that give the holder the right, but not the obligation, to buy a certain number of securities (usually the issuer's common stock) at a certain price before a certain time. Warr...

Warrant coverage is an agreement to provide warrants to a shareholder. Warrants are securities that give the holder the right, but not the obligation, to buy a certain number of securities (usually t...

A warrant premium is the percentage difference between the market price of a security and the price an investor pays for that security when buying and exercising a warrant. The formula for the warran...

A warranty is a guarantee, usually written, that a product or service works as expected. For example, when you buy a new car from a car dealer, the warranty states that the car works. If the car does...

Commonly referred to as "The Oracle of Omaha" because of his Nebraska roots, Warren Buffett is widely regarded as the world's most prominent value investor. Buffett caught the investing bug at the Un...

A wash occurs when two actions cancel each other out (such as a gain and an equal loss), effectively creating a break-even situation.Let's assume XYZ Company sells $1,000 worth of products. If the...

A wash sale occurs when an investor sells a security at a loss but then purchases the same or a substantially similar security within 30 days of the sale. Let's assume an investor owns 100 shares...

Wash trading occurs when an investor sells a security at a loss, then purchases the same or a substantially similar security within 30 days of the sale. Let's assume an investor owns 100 shares o...

A wash-out round is a round of financing that dilutes the original shareholders so much that their voting power is essentially "washed out." For example, let's assume that John starts Com...

A wasting asset is a property or security that has a limited life and loses value over its life. Assets have a useful life, usually based on the period of time that they have productive capacity....

A wasting trust holds the assets of qualified plans when the qualified plans are frozen. Let's say Company XYZ has a pension plan for its employees. It decides to switch everyone over to a 401(k)...

A watch list is a list of securities that regulators, brokerages, research firms, or other entities are interested in monitoring. Watch lists can be good or bad. An investor can start a watch list, f...

A water damage clause is the section of an insurance contract that details whether and how much the insurer will pay the insured for damage caused by water. For example, let's assume that John has a ...

A water ETF is an exchange-traded fund that invests in water-related companies. An exchange-traded fund (ETF) allow investors to purchase a basket of securities in a single transaction. There are se...

Water rights are the legal permissions to use water in a specific way. For example, let's assume that John buys a house on the famous Yellowstone River in Livingston, Montana. The house is on riv...

Watered stock is stock that is issued at a price far higher than the value of the issuer's assets. In technical terms, watered stock exists when the following is true: Stock price x Shares outst...

A waterfall payment is a repayment system by which senior lenders receive principal and interest payments from a borrower first, and subordinate lenders receive principal and inter...

A weak currency is a currency that is going down in value. A currency's value is fluctuating all the time. Sometimes you can buy more with a certain amount of currency, and sometimes you can buy ...

A weak dollar is used to describe the United States' currency decreasing in value relative to other currencies. The dollar's value is fluctuating all the time. Sometimes you can buy more with...

The random walk theory states that market and securities prices are random and not influenced by past events. The idea is also referred to as weak form efficiency or the weak form efficient-market...

In futures trading, weak hands are investors who do not intend to take delivery of the underlying asset. In currency trading, weak hands are investors who tend to follow traditional trading rules, thu...

Weak longs are investors who buy a stock (known as being "long"), but who will sell it at the first sign of a price decline. Weak longs tend to be traders, not investors. Short-term traders t...

Weak shorts are investors who short sell a stock (known as being "short"), but who will buy it back at the first sign of a price increase. Short-term traders typically only enter a short posi...

A weak sister is a security, economy or operating unit that performs worse than all the others. Let's say John Doe's portfolio contains five stocks: Company A, Company B, Company C, Company D...

In the business world, wealth is a measure of financial resources. Wealth is usually a measure of net worth; that is, it is a measure of how much a person has in savings, investments, real estate and...

Wealth management is an investment advisory service for high net worth individuals.Wealth management combines both financial planning and specialized financial services, including personal retail bank...

A wealth tax is based on a person's net worth or the value of his or her assets. Let's say John Doe makes $100,000 a year. He also has $500,000 saved for retirement and a house that is paid o...

A wedding warrant is a bond provision that requires the holder of a bond to relinquish the bond to the issuer if the holder purchases another bond with similar features from the same company.A bond wi...

The weekend effect is a theory that stock prices rise on Monday and fall on Friday. The idea behind the weekend effect is that companies tend to release bad news on Fridays, when the market has the w...

Weighted refers to the mathematical practice of adjusting the components of an index to reflect the importance of certain characteristics. Here is information about five stocks. If we wanted to cr...

Weighted average refers to the mathematical practice of adjusting the components of an average to reflect the importance of certain characteristics. Here is information about five stocks. We could...

Weighted average cost of capital (WACC) is the average rate of return a company expects to compensate all its different investors. The weights are the fraction of each financing source in the company'...

Weighted Average Market Capitalization refers to a stock market index in which larger companies (i.e. with higher market capitalization) have more influence on the index's performance.Various stoc...

Weighted average maturity or WAM is the weighted average amount of time until the securities in a portfolio mature. The higher the WAM, the longer it takes for all of the holdings in the portfo...

A Wells Notice is a letter from a regulator such as the Securities and Exchange Commission that warns a financial institution or financial professional that the SEC is beginning an investigation into ...

A trader is said to be "whipsawed" when the price of a security suddenly moves in the opposite direction of a trade that he just placed. For instance, if a trader buys shares of Apple at ...

A whisper number is an unofficial, unpublished earnings per share (EPS) forecast for a public company. It is not the same as a consensus estimate.To create a whisper number, somebody (usually a websit...

A white knight is a company that acquires another company that is trying to avoid acquisition by a third party. For example, let's assume that Company XYZ wants to acquire Company ABC. Company AB...

A wholly owned subsidiary is a subsidiary company whose parent company owns 100% of the company's outstanding common stock. In a wholly owned subsidiary, the parent company owns all of the sh...

A wide economic moat is a significant competitive advantage that is extremely difficult to copy or emulate, thereby creating a barrier to entry for competing firms. Castles were traditionally part ci...

Widow and orphan stocks are low-risk securities that pay high dividends. Widow and orphan stocks typically maintain their dividend payments to shareholders even through difficult financial times,...

Wildcat drilling is the process of looking for oil and natural gas wells in non-typical areas.Drilling oil and gas wells can be a good opportunity for risk-tolerant investors, particularly if the fiel...

A will is a legal document that indicates how a person wants his or her estate (money and property) to be distributed after death. Wills must expressly state to whom the will belongs and be signed, da...

Often combined with stochastics to detect overbought and oversold conditions, Williams %R -- or %R for short -- is a momentum indicator developed by Larry Williams.While stochastics compares the close...

The Wilshire 5000 Index is considered the "total market index." Designed to track the value of the entire stock market, the index was started in 1974 by Wilshire Associates soon after computer...

Window dressing is a term that describes the act of making a company's performance, particularly its financial statements, look attractive.Let's assume Company XYZ wants to look attractive to ...

In a brokerage firm, a wire room receives customer orders from brokers, sends the orders to the exchanges, and sends back notices of execution.   For instance, let's say John Doe is a brok...

A wire transfer is a method of transferring money electronically between two people or institutions.A wire transfer is made between two financial institutions by a person issuing instructions to one i...

A withdrawal penalty occurs when a depositor or investor withdraws funds from an account before an agreed-upon withdrawal date for disallowed purposes or in a disallowed manner. Individual retirement...

A withholding allowance reduces the amount of income tax an employer withholds from an employee's paycheck. Withholding allowances are indicated by employees on the IRS Form W-4 and appropria...

Withholding tax, also sometimes referred to as simply "withholding," is an amount that employers withhold from an employee's paycheck and remit to local and federal taxing authorities on beh...

Work in process refers to items in a manufacturing plant that are in the stages between raw materials and finished goods (or inventory). In-process goods are expected to be finished and moved into...

Working capital is money that’s available to a company for its day-to-day operations. Simply put, working capital indicates a company's operating liquidity and efficiency.  A company's w...

A working capital loan is a loan used by companies to cover day-to-day operational expenses.In many cases, companies are unable to generate the revenue needed to meet expenses incurred by day-to-day b...

A company's working ratio measures its ability to cover its annual expenses.A company's working ratio indicates whether or not it is capable of at least breaking even by dividing its annual ex...

The World Bank is an international financial institution dedicated to reducing poverty around the world through capital investment and the facilitation of trade.Based in Washington, D.C., the World Ba...

The World Trade Organization (WTO) establishes rules of trade among its member nations. To this end, the WTO also handles trade disputes, monitors trade policies, provides technical assistance for dev...

A write-down is the accounting term used to describe a reduction in the book value of an asset due to economic or fundamental changes in the asset. A write-down is the opposite of a write-up. A write...