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Compensation received by employees for services performed. Usually, wages are computed by multiplying an hourly pay rate by the number of hours worked.
- Browse Related Terms: bonus, compulsory payroll tax, earned income, employee, flat tax, Form W-4, Employee's Withholding Allowance Certificate, formal tax legislation process, income taxes, independent contractor, salary, self-employment loss, self-employment profit, tip income, wages
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Under the conflict of interest statute, 18 U.S.C. § 208, a waiver permits an employee to participate in specified Government matters which would otherwise conflict with private financial interests. Section 208(b)(1) and (b)(3) of the statute details the conditions under which a waiver may be granted. It must be issued in writing by the employee's appointing official or delegate. (The statute also provides, in section 208(b)(2), for exemptions by OGE regulation, for certain remote or inconsequential financial interests common to a large number of employees.)
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Giving up a legal right or advantage voluntarily.
State of Maine, Department of Professional and Financial Regulation - Cite This Source - This Definition
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If you have a waiver of premium provision in your long-term care or disability insurance policy, you may qualify to stop paying premiums once you've begun collecting benefits.
A waiver of premium provision increases the cost of your insurance but means that you won't be left without coverage if you are no longer able to pay the premiums.
- Browse Related Terms: Annual renewable term insurance, Cash value, Convertible term, Council of Economic Advisors (CEA), Elimination period, Guaranteed renewable policy, Lapse, Level term insurance, Life insurance, Nonforfeiture clause, Own-occupation policy, Paid-up policy, Premium, Renewable term, Term insurance, Variable Life Insurance, Waiver of premium
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Corporations may issue warrants that allow you to buy a company's stock at a fixed price during a specific period of time, often 10 or 15 years, though sometimes there is no expiration date.
Warrants are generally issued as an incentive to investors to accept bonds or preferred stocks that will be paying a lower rate of interest or dividends than would otherwise be paid.
How attractive the warrants are - and so how effective they are as an incentive to purchase - generally depends on the growth potential of the issuing company. The brighter the outlook, the more attractive the warrant becomes.
When a warrant is issued, the exercise price is above the current market price. For example, a warrant on a stock currently trading at $15 a share might guarantee you the right to buy the stock at $30 a share within the next 10 years. If the price goes above $30, you can exercise, or use, your warrant to purchase the stock, and either hold it in your portfolio or resell at a profit. If the price of the stock falls over the life of the warrant, however, the warrant becomes worthless.
Warrants are listed with a "wt" following the stock symbol and traded independently of the underlying stock. For example, if you own warrants to purchase a stock at $30 a share that is currently trading for $40 a share, your warrants would theoretically be worth a minimum of $10 a share, or their intrinsic value.
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When you purchase and then sell or sell and then repurchase the same security or a substantially similar security within 30 days, the double transaction is called a wash sale.
As an individual investor, you can't use any capital losses that the sale produces to offset capital gains from selling other securities in your portfolio.
For example, if you sold 200 shares of an underperforming stock on December 15 intending to use the loss on that sale to offset gains on other sales, your offset would be invalid if you repurchased the stock before the following January 15. But if you repurchased on January 16, the offset would be valid. In fact, avoiding wash sales is an important part of tax planning.
In a broader use of the term, purchasing and then quickly reselling a security may be described as a wash sale, whether the transaction is part of an innocent trading strategy or a pump-and-dump scheme.
- Browse Related Terms: Basis, Basis price, Capital Gain, Capital gains tax (CGT), Capital loss, Community property, Convertible hedge, Cost basis, Earnings, Fund family, Investment Income, Long-term capital gain (or loss), Paper profit (or loss), Phantom gains, Profit, Realized gain, Return, Return on investment, Sell short, Step-up in basis, Unrealized gain, Unrealized loss, Wash sale
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A weather derivative is a futures contract - or options on that futures contract - where the underlying commodity is a weather index.
These derivatives work much the same way that interest-rate or stock index futures and options do, by creating a tradable commodity out of something that is relatively intangible.
Analysts look at historical weather patterns - temperature, rainfall and other things - develop averages, and quantify the risk that weather will deviate from the average.
Corporations use weather derivatives to hedge their risk that bad weather will cause a financial loss. For a cereal company, bad weather might be a drought, which would cause wheat prices to go up. For a home heating company, it could be warm days in November, which could lower demand for home heating oil. And for an amusement park it could be rain.
The cereal company and the amusement park might buy futures contracts with an underlying weather index based on rainfall. The home heating company might want contracts based on a temperature index.
Weather derivatives are different from insurance, because they're linked to common weather events, like dry seasons, or a warm autumn, that affect particular businesses.
Insurance is still required to protect against major weather events, like tornadoes, hurricanes, and floods.
You can buy weather derivatives as an individual, but you'll want to consider the trading costs carefully to ensure that your risk of loss is worth the expense.
- Browse Related Terms: Cash settlement, Clearinghouse, Closing price, Commodity, Daily trading limit, derivative, Financial future, Fungible, Futures contract, Go long, Hedger, Open interest, Speculator, Trade date, Trading volume, Unit of trading, Weather derivative, Zero sum
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average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding.
Departments of the Treasury & Housing and Urban Development, Making Home Affordable Program - Cite This Source - This Definition- Browse Related Terms: Adjustable-Rate Mortgage (ARM), amortization, balloon mortgage, Convertible ARM, Debarment, Fixed-Rate Mortgage (FRM), Interest-only mortgage, Lock-In, Lock-in agreement, Mortgage life insurance, Negative amortization, Payment Cap, Right of rescission, Self-Amortizing Loans, Swap, term, Weighted Average Life (WAL)
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In weighted stock indexes, price changes in some stocks have a much greater impact than price changes in others in computing the direction of the overall index.
By contrast, in an unweighted index, prices changes in all the stocks have an equal impact.
A price weighted index, such as the Dow Jones Industrial Average (DJIA), is affected more by the changing prices of higher-priced securities than by changes in the prices of lower-priced securities.
Similarly, a market capitalization weighted index, such as the NASDAQ Composite Index, gives more weight to price changes in securities with the highest market values, calculated by multiplying the current price per share by the number of outstanding or floating shares.
A capitalization weighted index may also be called a market value weighted index.
The theory behind weighting is that price changes in the largest or most expensive securities have a greater impact on the overall economy than price changes in smaller-cap or less expensive stocks.
However, some critics argue that strong market performance by the biggest or most expensive stocks can drive an index up, masking stagnant or even declining prices in large segments of the market, and providing a skewed view of the economy.
- Browse Related Terms: Average, Breakout, Dogs of the Dow, Dow Jones 65 Composite Average, Dow Jones Industrial Average (DJIA), Dow Jones Transportation Average, Dow Jones Utility Average, Dow theory, Efficient market theory, Logarithmic scale, NASDAQ Composite Index, New York Stock Exchange Composite Index, Qubes, Value Line Composite Index, volume, Weighted stock index
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A whisper number is an unofficial earnings estimate for a particular company that a stock analyst shares with clients to supplement the official published estimate.
If the company reports earnings in line with the official estimate when the whisper number has been higher, the stock price may fall anyway since investors were expecting something better.
The same is true in reverse. If earnings fall short of official expectations but meet a lower whisper number, the stock price may go up.
- Browse Related Terms: Alpha, Book value, Dividend yield, Earnings estimate, Earnings momentum, Earnings surprise, Forward price-to-earnings ratio, Multiple, Outstanding shares, Price-to-book ratio, Price-to-earnings ratio (P/E), Price-to-sales ratio, Quarter, risk ratio, Special situation, Undervaluation, valuation, Value stock, Whisper number, Zacks Investment Research
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A corporation that is the target of a hostile takeover sometimes seeks out a white knight that comes to the rescue by making an offer to acquire the target company in a friendly takeover that suits the needs and goals of the target's management and board.
The hostile acquirer is called a black knight, and if the white knight is outbid by a third potential acquirer, who is both less friendly than the white knight and more friendly than the black knight, the third bidder is called a gray knight.
- Browse Related Terms: Asset allocation, Asset class, Balanced fund, diversification, Family of funds, Financial plan, Fund of funds (FOF), Lifecycle fund, Modern portfolio theory, Nonsystematic risk, Overweighted, portfolio, subclass, Synthetic investment, Target date fund, Target risk fund, Underweighted, White knight
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A whole life insurance policy is a type of permanent insurance that provides a guaranteed death benefit and has fixed premiums.
This traditional life insurance is sometimes also known as straight life insurance or cash value insurance.
With a whole life policy, a portion of your premium pays for the insurance and the rest accumulates tax deferred in a cash value account. You may be able to borrow against the cash value, but any amount that you haven't repaid when you die reduces the death benefit.
If you end the policy, you get the cash surrender value back, which is the cash value minus fees and expenses. However, ending the policy means you no longer have life insurance and no death benefit will be paid at your death.
- Browse Related Terms: Accelerated death benefit, Asset, Cash surrender value, Cash value account, Credit Life Insurance (CLI), Death benefit, Decreasing term insurance, Depreciation, Face value, Insurance trust, Life settlement, Lump sum, Pension maximization, Permanent insurance, Straight life, Survivorship life, Universal life insurance, Viatical settlement, Whole life insurance
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Widely diversified is a central element of the definition of an Excepted Investment Fund and of a Qualified Trust. A fund (or a qualified trust) is widely diversified if it holds no more than 5% of the value of its portfolio in the securities of any one issuer (other than the United States Government) and no more than 20% in any particular economic or geographic sector.
- Browse Related Terms: American Association of Individual Investors (AAII), Excepted Investment Fund (EIF), Investment Club, Lipper, Inc, Morningstar, Inc., Separate account, Separate account fund, Subaccount, Underlying Assets, Value Line, Inc., Widely Diversified
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A will is a legal document you use to transfer assets you have accumulated during your lifetime to the people and institutions you want to have them after your death.
The will also names an executor - the person or people who will carry out your wishes.
You can leave your assets directly to your heirs, or you can use your will to establish one or more trusts to receive the assets and distribute them at some point in the future.
The danger of dying without a will is that a court in the state where you live will decide what happens to your assets. Their decision may not be what you would have chosen, and their deliberations can create a delay in settling your estate.
- Browse Related Terms: Estate account, Executor/Executrix, Irrevocable trust, Payable-on-death, Probate, Probate estate, Transferable-on-death, will
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National brokerage firms with multiple branches were, in the past, linked by private telephone or other telecommunications networks that enabled them to transmit important news about the financial markets almost instantaneously.
Because of these lines, or wires, the firms became known as wire houses.
Although the Internet now makes it possible for all firms - and even individual investors - to have access to high-speed electronic data, the largest brokerage firms are still referred to as wire houses because of the technological edge they once enjoyed.
- Browse Related Terms: Bourse, Currency trading, Cyber Crime, NASDAQ, NASDAQ Stock Market, real time, Stock market, Wire house
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When brokerage firm orders to buy and sell were handled manually, the back office of the firm was called the wire room.
People who worked there received the buy or sell orders that came in from brokers and transmitted them to the firm's trading department or floor traders for execution. The wire room also received notifications when the transactions were completed and sent those notifications back to the brokers who took the orders.
However, as electronic systems increasingly handle these communications, wire rooms have essentially disappeared.
- Browse Related Terms: broker-dealer, Brokerage account, Brokerage firm, Brokerage window, Commission, Deep discount brokerage firm, Discount brokerage firm, Floor broker, Full-service brokerage firm, Internalization, Online brokerage firm, Online trading, Price improvement, Soft dollars, Wire room
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An electronic transfer of money from one person to another. A more narrow technical meaning, referring to one certain method of transferring funds, which usually involves an electronic transfer of funds from one credit union account to another.
- Browse Related Terms: Account Agreement, Checking Account (Share Draft Account), Credit card issuer, Credit Union, Credit Union Statement, Dividends, Drawee, Drawee Institution, Financial Performance Report (FPR), Furnisher, Index-linked Share Certificate (SC), Peer Average Ratio, Percentile Rankings, Personal Savings Account, Share Account, Share Certificate, Share Draft Account, Wire transfer
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A withdrawal is money you take out of your banking, brokerage firm, or other accounts.
If you withdraw from tax-deferred retirement accounts before you turn 59 1/2, you may owe a 10% early withdrawal penalty plus any income tax that's due on the amount.
In everyday usage, the term withdrawal is used interchangeably with distribution to describe money you take from your tax-deferred accounts, though distribution is actually the correct term.
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Withholding is the amount that employers subtract from their employees' gross pay for a variety of taxes and benefits, including Social Security and Medicare taxes, federal and state income taxes, health insurance premiums, retirement savings, education savings, or flexible spending plan contributions, union dues, or prepaid transportation.
Contributions to tax-deferred savings plans are withheld from your pretax income, as are amounts you put into tax-free flexible spending and prepaid transportation accounts. Those amounts reduce the taxable salary that your employer reports to the IRS.
- Browse Related Terms: Cafeteria plan, Cash balance plan, Defined Benefit Pension Plan, Defined benefit plan, Defined Contribution Pension Plan, Defined Contribution Plan, Employee Retirement Income Security Act (ERISA), Employer sponsored retirement plan, Federal Insurance Contributions Act (FICA), Flexible spending account, Integrated pension plan, Nondiscrimination rule, Pension, Pension Benefit Guaranty Corporation (PBGC), Plan participant, Portable benefits, Qualified retirement plan, Retirement Accounts, Self-directed retirement plan, Social Security, Vesting, Withholding
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Money, for example, that employers withhold from employees paychecks. This money is deposited for the government. (It will be credited against the employees' tax liability when they file their returns.) Employers withhold money for federal income taxes, Social Security taxes and state and local income taxes in some states and localities.
- Browse Related Terms: amount due, deficit, Direct Deposit, inflation, interest, interest income, nonrefundable credit, Refund, refundable credit, tax liability (or total tax bill), taxes, withholding ("pay-as-you-earn" taxation)
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a way to resolve or restructure a loan to prevent a homeowner from going into foreclosure through a loan modification, forbearance or short sale.
Departments of the Treasury & Housing and Urban Development, Making Home Affordable Program - Cite This Source - This Definition- Browse Related Terms: Deferred payments, Foreclosure, Home Affordable Foreclosure Alternatives Program (HAFA), Home Affordable Modification Program (HAMP), Home Affordable Refinance Program (HARP), Home Owners’ Loan Act, Loss Mitigation, Second Lien Modification Program (2MP), Trial Period or Trial Period Plan, Work Out