Category: Financial Terms

Weather Derivative Key takeaways Weather derivatives are financial contracts that pay out based on an objective weather index (temperature, rainfall, snowfall, etc.) to hedge weather-related revenue or cost risk. They are used by agriculture, energy, tourism, construction, and event businesses to smooth earnings exposed to weather variability. Traded both over-the-counter (OTC) and on exchanges (e.g.,…

Wearable Technology Wearable technology (wearables) refers to electronic devices worn on the body or embedded in clothing or skin. Modern wearables combine sensors, microprocessors, wireless connectivity, and software to collect, process, and transmit data. Initially focused on consumer accessories like watches and eyeglasses, wearables are increasingly applied to healthcare, safety, and industrial use cases. Key…

Wear and Tear Exclusion Key takeaways A wear and tear exclusion bars coverage for damage that results from normal deterioration, aging, or lack of maintenance. Insurers expect owners to anticipate and absorb predictable losses; insurance covers sudden, unforeseen perils. Many disputes arise when an insurer attributes damage to wear and tear rather than a covered…

What is a wealth tax? A wealth tax is a levy on the net fair market value of a person’s assets (assets minus liabilities). Unlike income tax, which taxes earnings and realized gains, a wealth tax targets the stock of accumulated assets — for example, cash, bank deposits, stocks, real estate, boats, art, retirement accounts,…

Wealth Psychologist A wealth psychologist is a mental health professional who specializes in the emotional, relational, and behavioral issues that arise from significant wealth. Also called money psychologists or wealth counselors, they work with high-net-worth individuals and families to address challenges that financial advice alone does not solve. What they do Wealth psychologists help clients…

Wealth Management: An Overview What is wealth management? Wealth management is a holistic, advisory service that helps affluent clients coordinate and grow their financial lives. Rather than offering isolated products, wealth managers create tailored plans that combine investment management with services such as estate planning, tax strategies, retirement planning, insurance, and sometimes banking or philanthropic…

Wealth Effect What it is The wealth effect is a behavioral-economic concept that describes how increases in the market value of households’ assets—most commonly housing and investment portfolios—tend to boost consumer confidence and spending. People often feel “richer” when their asset values rise even if their income and fixed expenses remain unchanged, and that perceived…

Wealth Added Index (WAI): What it Is and How It Works Definition The Wealth Added Index (WAI) is a measure developed by Stern Value Management to assess whether a company is creating or destroying shareholder value. It compares total shareholder returns (share price gains plus dividends) with the company’s cost of equity. If returns exceed…

Wealth Wealth is the total value of a person’s or entity’s assets—both tangible (property, land) and intangible (investments, intellectual property)—minus liabilities (debts). It is a stock measured at a point in time, commonly expressed as net worth, and differs from income, which is a flow over time. Key takeaways Wealth = assets − liabilities (net…

Weak Sister Definition “Weak sister” is slang for a weak or undependable element within a system that can undermine overall performance. It can refer to an individual, a team, a business unit, a company, or even a whole economy that lags behind and poses a risk to the broader group or process. Key points A…

What are weak shorts? Weak shorts are traders who hold short positions but will quickly exit at the first sign of price strength. Typically lacking deep capital or willingness to increase exposure, weak shorts use tight stop-losses to limit losses. While the term can apply to any short seller, it most often describes retail traders…

Weak Hands “Weak hands” is a market slang term for traders or investors who lack conviction, patience, or the financial resources to hold positions through normal volatility. They tend to react quickly to fear or short-term news, often buying near highs and selling near lows — a behavior that typically produces poor investment results. What…

Weak Form Efficiency Definition Weak form efficiency is a version of the efficient market hypothesis (EMH) which asserts that all information contained in past prices, trading volumes, and historical returns is already reflected in current stock prices. Because historical data offers no predictive power, future price movements are effectively random with respect to past price…

Weak Dollar: What It Means and How It Works What is a weak dollar? A weak dollar means the U.S. dollar is declining in value relative to other currencies. Practically, one U.S. dollar buys less foreign currency than before. That makes imports and foreign-priced goods more expensive for U.S. consumers and makes U.S. exports cheaper…

Weak AI (Narrow AI): Definition, Examples, and Limits Weak AI, or narrow AI, refers to artificial intelligence systems designed to perform a specific task or a narrow range of tasks. Unlike the theoretical concept of strong (general) AI—which would possess human-level general intelligence—weak AI lacks consciousness and true understanding, even when it appears to simulate…

Elliott Wave Theory: A Concise Guide Key takeaways * Elliott Wave Theory interprets market price movements as recurring, fractal wave patterns driven by investor psychology. * Price action alternates between motive (impulse) waves and corrective waves; impulses typically subdivide into five waves, corrections into three (with exceptions). * Wave relationships often align with Fibonacci ratios…

Waterfall Payment: Definition, How It Works, Benefits, Example Key takeaways * A waterfall payment is a priority-based schedule that determines the order in which creditors (or claimants) receive interest and principal. * Senior (higher-tier) creditors are paid before subordinated (lower-tier) creditors; lower tiers often receive interest-only payments until seniors are satisfied. * Waterfalls can be…

Waterfall Concept The waterfall concept is an estate-planning strategy that uses a permanent life insurance policy (typically whole life) to transfer wealth tax-efficiently from one generation to the next. Instead of making large taxable gifts or subjecting assets to probate, the policy—and its tax-deferred cash value—can be transferred or designated to descendants so they receive…

Watered Stock: What It Is and How It Works Watered stock refers to shares issued at a value that far exceeds the real value of the company’s underlying assets. Historically this was a method used to defraud investors by overstating a corporation’s worth and selling stock at inflated prices. How the Scheme Worked Owners exaggerated…

Watercraft Insurance: What it is and how it works Key takeaways Watercraft insurance covers boats, yachts, and personal watercraft against physical damage, theft, and liability. The type and cost of coverage depend on vessel size, value, use, and navigational territory. Policies may pay actual cash value (ACV) or agreed value (AV); AV is generally better…

Water Rights Water rights are the legal entitlements that allow property owners to access and use water adjacent to or on their land. In the United States these rights are primarily governed by state law and fall into distinct doctrines that vary by region and water type. Key types of water rights Riparian rights Apply…

Water Quality Improvement Act of 1970 Overview The Water Quality Improvement Act of 1970 strengthened federal authority over water pollution and expanded the legal framework for setting and enforcing water quality standards in the United States. It built on earlier laws to restrict harmful discharges—especially oil—and established procedures to prevent the degradation of navigable waters….

Water Exclusion Clause: What It Means and How It Works A water exclusion clause is a common provision in homeowners and renters insurance policies that denies coverage for certain water-related losses. It typically excludes damage from external, natural, or large-scale water events while leaving room for coverage of some internal, accidental water damage. Key takeaways…

Water Damage Legal Liability Insurance Key takeaways Water damage legal liability insurance covers your legal responsibility if your property or actions unintentionally cause water damage to someone else’s property or possessions. Many homeowners, condo and renters policies include this liability coverage, but coverage usually applies only to sudden, accidental events (burst pipes, appliance failures, etc.)….

Water Damage Insurance: What It Is and How It Works Key takeaways * Water damage coverage in a standard homeowners policy usually applies to sudden, accidental events (e.g., burst pipes). * Damage from gradual leaks, poor maintenance, negligence, and floods is typically not covered. * Common covered events include burst pipes, plumbing failures, and appliance…

Watchlist: Definition, Purpose, and How to Create One What is a watchlist? A watchlist is a collection of securities an investor monitors for potential trading or investing opportunities. It helps focus attention on a subset of the market to spot price moves, news catalysts, or technical signals that might trigger a trade or a buy…

Wasting Trust What it is A wasting trust is a trust whose assets decline over time because the trust no longer receives new contributions and continues to make required payouts. The principal is gradually spent down until the trust is exhausted. The term also applies to income trusts that hold depleting assets (for example, oil…

Reserve Ratio (Cash Reserve Ratio): Definition, Calculation, and Impact What is the reserve ratio? The reserve ratio (or cash reserve ratio) is the percentage of customer deposits that commercial banks are required to hold and not lend out. Central banks set this requirement to help ensure liquidity, influence the money supply, and support overall financial…

Wassily Leontief Key takeaways * Wassily Leontief was a Russian‑American economist best known for developing input–output analysis and for the Leontief Paradox. * He won the Nobel Memorial Prize in Economics in 1973 for his empirical work on input–output tables. * His methods influenced economic planning and analysis at institutions such as the World Bank,…

Wash Trading — Definition, How It Works, and Real-World Examples What is wash trading? Wash trading is a form of market manipulation in which the same trader (or colluding parties) simultaneously buys and sells the same security or asset to create misleading market activity. The goal is to fabricate trading volume or false price signals…

Wash-Sale Rule — Definition and Purpose A wash sale occurs when an investor sells a security at a loss and buys the same or a “substantially identical” security within 30 days before or 30 days after the sale. The rule—enforced by the IRS—prevents taxpayers from realizing a tax loss while essentially retaining the same investment…

Wash Sale: Definition, How It Works, and Tax Implications What is a wash sale? A wash sale occurs when an investor sells a security at a loss and purchases the same or a substantially identical security within 30 days before or 30 days after the sale. The Internal Revenue Service (IRS) disallows the immediate deduction…

Wash-Out Round: What It Means and How It Works A wash-out round (also called a burn-out round or cram-down deal) is a financing event in which new investors purchase equity on terms that drastically dilute existing shareholders, allowing the newcomers to seize control of the company. These rounds typically occur as emergency, last-resort financings for…

Wash Key takeaways In general usage, a wash is a transaction (or set of transactions) that results in a net gain of zero—a break-even outcome. For investors, the IRS wash sale rule can disallow a loss if the same or a substantially identical security is repurchased within 30 days before or after the sale. A…

Warsaw Stock Exchange (WSE) What it is The Warsaw Stock Exchange (WSE) is Poland’s main securities market and the largest stock exchange in Central and Eastern Europe. It operates financial and commodities markets that facilitate trading in equities, bonds, derivatives, and energy-related contracts, and it also handles clearing and settlement services. Key facts Founded as…