Glossary of Financial Terms
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Warrant
A long-term call option offered with recently issued debt as a sweetener. It enables the holder to buy company shares at a pre-determined price in the future. Since call options will pay off if the firm’s stock is doing well, warrants are used to indicate the confidence of the firm, which in turn will decrease the coupon rate on the bond being issued. Warrants are very likened to convertible bonds in this sense. The only contrast would be that warrant holders pay the pre-determined price to acquire the share, whereas convertible-bond holders give up the bond in exchange for company shares at a pre-determined conversion ratio.
Because I haven’t heard of companies that attach long term put options to their newly issued debt, so there is no put option counterpart for “warrant.” Issuing put options on a company’s own stock is equivalent to a person admitting that he is the biggest loser in the world.
See also “Call Option,” “Convertible Bond” and “Put Option.”
Wholesale Banking
See “Commercial Banking.”
Working Capital
Also called “Gross Working Capital.” It is basically the current assets of a firm. This type of capital “works” for the firm in that it guarantees the smooth operation of
the firm. For individuals, we can consider the petty cash in our wallet and the balance on our checking account as working capital, since they ensure that we can go about our daily lives smoothly.
Please see “Current Assets.”
World Bank
Both the World Bank and the International Monetary Fund (IMF), were created by the victorious countries of the Second World War. The two institutions, similarly headquartered in Washington D.C., were designed to help rebuild the post-war economy of the allied countries. The World Bank is not a typical bank in the common sense. It is one of the United Nations’ specialized agencies, and is comprised of about 200 member countries. Its main directive is to make loans to developing countries for social overhead capital projects such as building schools and health centers, providing water and electricity, fighting disease, as well as protecting the environment.