Glossary of Finance Terms

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Warrant

A long-term option to buy a stated number of shares of common stock at specified price.

Warrant

A long-term option to buy a stated number of shares of common stock at a specified price.

Weighted Average Cost of Capital, WACC

A weighted average of the component costs of debt, preferred stock, and common equity.

White Knight

A company that is acceptable to the management of a firm under threat of a hostile takeover.

Working Capital

A firm's investment in short-term assets--cash, marketable securities, inventory, and accounts receivable.

Working Capital Policy

Basic policy decision regarding (1) target levels for each category of current assets and (2) how current assets will be financed.

Worst-Case Scenario

An analysis in which all the input variables are set at their worst reasonably forecasted values.