Glossary of Financial Terms starting with Alphabet ‘W’

Glossary of ‘Financial Terms’ starting with Alphabet ‘W’, i.e. ‘Meaning’ or ‘Definition’ of Common and Unusual terms relating to Accounting, Auditing, Company Law, GST, Income Tax, Investments, etc., along with the ‘Context’ in which they are used.

Warrant

An options contract often sold with another security. For instance, corporate bonds may be sold with warrants to buy common stock of that corporation. Warrants are generally detachable.

Wash sales

A wash sale involves a person, either directly or indirectly, being both the buyer and seller of securities in the same transaction, so that there is no actual change in ownership of the securities. The manipulator will undertake frequent trades hoping to attract other investors who note the increased turn over in the security. The manipulator aims to gain financially through creating a small price differential between the buy and sell rates of the security in question.

White Knight (U.S.)

A friendly bidder, willing to offer more for a target share than an existing hostile bidder to rescue a company that is about to fall into the hands of an unwelcome suitor. They are usually persuaded by the company that is subject to a hostile bid to come to its rescue.

Window Dressing

A manoeuvre often engaged in by companies, banks, mutual funds etc., at the end of the accounting period in order to impress stock holders who will be receiving the report showing that funds are better managed and invested than what might have been drawn up.

Winner’s Curse

The tendency that in a bidding contest or in some types of auctions, the winner is the bidder with the highest (over-optimistic) estimate of value. This explains the high frequency of negative returns to acquiring firms in takeovers with multiple bidders.

Wolf

Speculators who make a kill in the market.

Worst case scenario loss

The worst case loss of a portfolio would be calculated by valuing the portfolio under several scenarios of changes in the underlying prices and volatility. The maximum loss in any situation is referred to as the Worst Scenario Loss.

Writer

A person who issues an option. The individual who at the end of the day has to buy or sell the asset on which the option is written, should the person who holds the option wish to exercise his rights.

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