R A NASDAQ stock symbol specifying that the stock has rights.
R-Squared A statistical measure that represents the percentage of a fund's or security's movements that are explained by movements in a benchmark index. For fixed-income securities the benchmark is the T-bill, and for equities the benchmark is the S&P 500.
Rabbi Trust A trust created for the purpose of supporting the non-qualified benefit obligations of employers to their employees.
Raider An individual or organization who tries to take over a company by initiating a hostile takeover bid.
Rainbow Option A single option that is linked to two or more underlying securities. In order for the option to payoff all of the underlying securities must move in the intended direction.
Rainmaker An employee of a brokerage firm who brings a large amount of wealthy individuals or corporations to the brokerage firm's client base.
Rally A rise in the prices of individual securities, bonds, or indexes, following a period of flat or declining prices.
Ramp Up To increase a company's operations in anticipation of increased demand.
Random Walk Theory The theory that stock price changes have the same distribution and are independent of each other, so the past movement or trend of a stock price or market cannot be used to predict its future movement.
Range A stocks low price and high price for a particular trading period, such as the close of a day's trading, the opening of a day's trading, a day, a month, or a year.
Rate Anticipation Swap A type of swap in which bonds are swapped according to their current duration and predicted interest rate movements.
Rate of Change - ROC The speed at which a variable changes over a specific period of time.
Rating 1. An evaluation of a corporate or municipal bond's relative safety from an investment standpoint. Basically, it scrutinizes the issuer's ability to repay principal and make interest payments.
2. An analyst's recommendation on whether to buy, sell, or hold a specific stock.
Ratings Service A company, such as Moody's or Standard &; Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends.
Rationalization A reorganization of a company in order to increase its efficiency. This reorganization may lead to an expansion or reduction in company size, a change of policy, or an alteration of strategy pertaining to particular products.
Razor - Razorblade Model A business tactic involving the sale of dependant goods for different prices. One good is sold at a discount, while the second dependant good is sold at a considerably higher price.
Reaction The typical downward movement in the price of a security after the price had previously risen.
Reaganomics A popular term used to refer to the economic policies of Ronald Reagan, the 40th U.S. President (1981–1989), which called for widespread tax cuts, decreased social spending, increased military spending, and the deregulation of domestic markets.
Real Asset Physical or identifiable assets such as gold, land, equipment, patents, etc. They are the opposite of a financial asset.
Real Estate Land plus anything permanently fixed to it, including buildings, sheds, and other items attached to the structure.
Real Estate Agent A person with a state/provincial license to represent a buyer or a seller in a real estate transaction in exchange for a commission. Most agents work for real estate brokers or realtors.
Real Estate Investment Trust - REIT A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations, and typically offer investors high yields as well as a highly liquid method of investing in real estate. Equity REITs: Equity REITS invest in and own properties (thus responsible for the equity or value of their real estate assets). Their revenues come principally from their properties' rents. Mortgage REITs: Mortgage REITs deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or invest in (purchase) existing mortgages or mortgage backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans. Hybrid REITs: Hybrid REITs combine the investment strategies of Equity REITs and Mortgage REITs by investing in both properties and mortgages.
Real Estate Limited Partnership A direct participation program formed to build new structures and generate income from existing property, or profit from the capital appreciation of undeveloped land.
Real Estate Mortgage Investment Conduits - REMIC A complex pool of mortgage securities created for the purpose of acquiring collateral. This base is then divided into varying classes of securities backed by mortgages with different maturities and coupons.
Real GDP Gross Domestic Product which is calculated and adjusted for inflation.
Real Interest Rate The amount by which the nominal interest rate is higher than the inflation rate.
Real Option An alternative or choice that becomes available with a business investment opportunity.
Real Rate of Return The annual percentage return realized on an investment adjusted for changes in prices due to inflation or deflation.
Real Time Gross Settlement - RTGS The continuous settlement of payments on an individual order basis without netting debits with credits across the books of a central bank.
Real-Time Trade Reporting A requirement imposed on Market Makers (and in some instances, nonMarket Makers) to report each trade immediately after completing the transaction.
Receivable Turnover Ratio An accounting measure used to quantify a firm's effectiveness in extending credit and success in collection of debts.
Receive Versus Payment - RVP An instruction accompanying sell orders, stating that only cash will be accepted in exchange for delivery of the securities.
Receiver A person appointed by a bankruptcy court or secured creditor to run a company for a short period of time in a manner that will ensure as much debt is paid back to creditors as possible.
Receivership A type of bankruptcy a company enters when a receiver is appointed by bankruptcy courts or creditors to run the company.
Recession A significant decline in activity spread across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income, and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's GDP.
Recharacterization The treatment of a contribution as being made to another type of IRA instead of the IRA that the contribution was initially made.
Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event.
Recognized Gain The amount of gain reported for income tax purposes.
Recognized Loss The amount of loss reported for income tax purposes.
Reconversion A conversion of assets that were already converted and recharacterized back to the Traditional IRA.
Refinance 1. When a business or person revises their payment schedule for repaying debt.
2. Replacing an older loan with a new loan offering better terms.
Reflation An economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country's output.
Refund A payment from the government for an individual's overpaid taxes. An individual in this situation is said to be "over-withholding." Federal income tax refunds are not taxable.
Refundable Credit A tax credit that is not limited by the amount of an individual's tax liability.
Refunded Bond A bond, originally issued as a regular or revenue bond, that is now secured by a second issue of bonds which are held in an "escrow fund" consisting of U.S. government debt until the first bond issue reaches maturity.
Refunding Retiring an outstanding bond issue at maturity by using money from the sale of a new offering.
Regional Stock Exchange Any exchange that resides beyond the country's main financial center.
Registered Education Savings Plan - RESP A savings plan that is sponsored by the Canadian government and encourages investing in future post-secondary education for a child.
Registered Investment Advisor - RIA An advisor, registered with the Securities and Exchange Commission, who manages the investments of others.
Registered Pension Plan - RPP A retirement plan that will provide pension benefits for an employee of a company and is contributed to by both employee and employer. Contributions to the plan are tax-deductible.
Registered Retirement Income Fund - RRIF A fund that is available to RRSP holders. Tax is deferred however an investor in an RRIF must withdraw a certain amount each year, and pay tax on it.
Registered Retirement Savings Plan - RRSP A Canadian financial planning instrument that allows contributions to be used in income tax deductions. The hope is that this will encourage people to save for their retirement.
Registered Security 1. The name given to securities whereby ownership is registered with the issuing company or their agent.
2. Securities that are unavailable for sale due to restrictions placed upon them at the time of issue.
Registration Right A contractual right giving investors holding restricted stock the ability to demand that the issuing company register the shares to the SEC, effectively making the stock available for sale to the public.
Regression Linear regression is used to explain and/or predict. The general form is: Y = a + bX + u Where Y is the variable that we are trying to predict, X is the variable that we are using to predict Y, a is the intercept, b is the slope, and u is the regression residual.
Regressive Tax A tax that takes a larger percentage from the income of low-income people than the income of high-income people.
Regulated Investment Company - RIC A mutual fund or real estate investment trust that is eligible to pass the taxes on capital gains, dividends, or interest payments onto the clients or individual investors.
Regulation A An SEC regulation that governs offerings of $5,000,000 or less, which qualify for simplified registration (an exemption).
Regulation D An SEC regulation that governs private placement exemption when there is no investment banker involved.
Regulation Fair Disclosure - Reg FD A rule passed by the Securities and Exchange Commission in an effort to prevent selective disclosure by public companies to market professionals and certain shareholders. The Reg FD rule reads as follows: "Whenever an issuer, or any person acting on its behalf, discloses any material nonpublic information regarding that issuer or its securities to [certain enumerated persons], the issuer shall make public disclosure of that information... simultaneously, in the case of an intentional disclosure; and... promptly, in the case of a non-intentional disclosure."
Relative Strength A measure of price trend that indicates how a stock is performing relative to other stocks in its industry.
Relative Strength Index - RSI A technical analysis indicator that compares the days that a stock finishes up against when it finishes lower. The RSI ranges from 0 to 100, but a stock is considered overbought if it reaches the 70 level, meaning that you should consider selling. When it is a true bull market, an RSI of 80 might be a better level since stocks often trade at higher valuations. Likewise, if the RSI approaches 30, it is a strong buying indicator (20 in a strong bear market).
Reload Option An employee stock option that grants additional options upon exercise of the original.
Remainder Man A person who receives the principal remaining in a trust account after expense payments and required payments to the beneficiary have been made.
Rent-Seeking When a company, organization, or individual uses their resources to obtain an economic gain from others without reciprocating any benefits back to society through wealth creation.
Reorganization A process designed to revive a financially troubled or bankrupt firm. A reorganization involves the restatement of assets and liabilities, and communication with creditors in order to make arrangements for maintaining repayment.
Repatriation The process of converting a foreign currency into the currency of one's own country.
Repayment The act of paying back a debt.
Replacement Cost The price that will have to be paid to replace an existing asset with a similar asset.
Replacement Risk A consequence of settlement risk.
Reporting Level A level of ownership of a specific futures position wherein the holders exceed the stated amounts and are required by the CFTC to submit daily reports.
Repudiation When one party refuses to honor their terms in a loan contract.
Repurchase Agreement - Repo A form of short term borrowing for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the following day.
Required Beginning Date The date by which a qualified plan participant or IRA owner must begin receiving required minimum distributions from his or her retirement account.
Required Minimum Distribution - RMD The amount that Traditional, SEP and SIMPLE IRA owners and qualified plan participants must begin distributing from their retirement accounts by April 1 following the year they reach age 70 ½. RMD amounts must then be distributed each subsequent year.
Required Rate of Return The rate of return needed to induce investors or companies to invest in something.
Rescission The right of an individual involved within a contract to return to the identical state as before they entered into the agreement, due to courts not recognizing the contract as legally binding.
Research and Development - R and D A company's activities that are directed at developing new products or procedures.
Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank.
Reset Margin The additional fixed spread above the index underlying a floating-rate security.
Resident Alien A foreigner who is a permanent resident of the country he or she resides, but does not have citizenship.
Residual Interest A type of interest payment received by investors in a real estate mortgage investment conduit (REMIC).
Residual Security Another way to describe convertibles.
Resistance The price a stock or market can trade at, but cannot exceed, for a certain period of time. Often referred to as resistance level.
Restatement A revision in a company's earlier financial statements.
Restricted Stock Insider holdings that are under some other kind of sales restriction. Restricted stock must be traded in compliance with special SEC regulations.
Restructuring A major business modification, usually associated with personnel downsizing and asset revaluation.
Retail Banking Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth.
Retail Investor Individual investors who buy and sell securities for their personal account, and not for another company or organization.
Retail Price Index - RPI An index that gathers the prices of several retail goods in outlets across the United States in order to give an indication of the rate of inflation.
Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. Calculated by adding net income to (or subtracting any net losses from) beginning retained earnings and subtracting any dividends paid to shareholders.
Retender The act of an investor selling the delivery note issued by a clearing house upon tender by the counter-party of the futures contract.
Retention Ratio The percent of earnings credited to retained earnings. In other words, the proportion of net income that is not paid out as dividends.
Retirement of Securities 1. The cancellation of stocks or bonds because the issuer has bought them back.
2. The removal of an asset from securities markets because its maturity date has been reached.
Retracement A reversal in the movement of a stock's price, countering the prevailing trend.
Retractable Bond A bond that features an option for the holder to redeem it before maturity.
Return The gain or loss for a security in a particular period, consisting of income plus capital gains relative to investment. It is usually quoted as a percentage.
Return of Capital A return from an investment that is not considered income. The return of capital is when some or all of the money an investor has in an investment is paid back to him or her, thus decreasing the value of the investment. This is not a gain of any type because it is not in excess of the original investment.
Return On Assets - ROA A useful indicator of how profitable a company is relative to its total assets. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as Return on Investment.
Return on Capital Employed - ROCE A ratio that indicates the efficiency and profitability of a company's capital investments.Calculated as:
Revenue Anticipation Note - RAN A security issued based on the premise that future revenues will be sufficient to meet repayment obligations.
Revenue Bond A municipal bond supported by the revenue from a specific project, such as a toll bridge, highway, or local stadium.
Revenue Officer 1. A person working for the Internal Revenue Service (IRS) collections department.
2. Short for Chief Revenue Officer, a person responsible for all revenue-generating functions.
Revenue Per Employee An important ratio that looks at a company's sales in relation to the number of employees they have. It is calculated as:
Revenue Per User - RPU A ratio used to analyze profitability per user. RPUs are calculated by taking overall revenue and dividing by total number of users.
Revenue Seat Miles - RPM Also known as revenue passenger miles, RPM refers to how many seats were actually sold on an airline's flight.
Reversal A sudden change in the price direction of a stock, index, commodity or derivative security. Can also be called a trend reversal, rally or correction.
Reversal Amount In the context of Point & Figure charts, the reversal amount is the number of boxes (an X or an O) required to cause a reversal. A reversal would be represented by moving the next column and changing direction.
Reverse Convertible Note - RCN A synthetic instrument that behaves similar to both bonds and stocks, providing high coupon payments with final payoffs dependant upon the equity markets.
Reverse Leveraged Buyout The action of offering new shares to the public by companies that initially went private through past LBOs.
Reverse Mortgage A special type of loan used to convert the equity in a home into cash. The money obtained through a reverse mortgage is usually used to provide seniors with financial security in their retirement years.
Reverse Repurchase Agreement The purchase of securities with the agreement to sell them at a higher price at a specific future date.
Reverse Stock Split A reduction in the number of a corporation's shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares (market capitalization) remains the same.
Reverse Takeover - RTO 1. The buying out of larger company by a smaller company.
2. The purchasing of a public company by a private company.
Reverse Triangular Merger When the subsidiary of the acquiring corporation merges with the target firm. In this case, the subsidiary's equity merges with the target firm's stock. As a result of the merger, the target would become a wholly-owned subsidiary of the acquirer and shareholders of the target would get shares of the acquirer.
Revocable Beneficiary A beneficiary in a life insurance policy or segregated fund contract whose compensation can be changed or terminated without their consent.
Revocable Trust A trust whereby provisions can be altered or cancelled dependent on the grantor. During the life of the trust, income earned is distributed to the grantor, and only after death does property transfer to the beneficiaries.
Revoked IRA An IRA holder may revoke an IRA within the 7 days after the IRA is established. When an IRA holder elects to revoke the IRA, the full amount contributed to the IRA must be returned to the IRA holder.
Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to take and repay funds at will. It is usually used for operating purposes, fluctuating each month depending on revenues and expenditures.
RevPAR A performance metric in the hotel industry which stands for "revenue per available room." RevPAR is typically calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate. It may also be calculated by dividing a hotel's total guestroom revenue by the room count and the number of days in the period being measured.
Rho The rate at which the price of a derivative changes with interest rates.
Riding the Yield Curve A trading strategy that is based upon the yield curve and used for interest rate futures. Investors hope to achieve capital gains by employing this strategy.
Right A security giving stockholders entitlement to purchase new shares issued by the corporation at a predetermined price (normally less than the current market price) in proportion to the number of shares already owned. Rights are issued only for a short period of time, after which they expire.
Right of First Refusal In general, the right of a person or company to purchase something before the offering is made available to others.
Rights Offering (Issue) The issuing of rights, to existing shareholders of a security, to buy a proportional number of additional securities at a given price (usually at a discount) within a fixed period.
Ring Fence A strategy with which an investor isolates a certain amount of money from any outside risk.
Rings Trading arenas, located on the floor of an exchange, in which traders execute orders. Rings are also referred to as pits.
Rio Trade In the securities market, a transaction made in a desperate attempt to recover previous losses.
Ripple A metaphor for a short-term market trend.
Rising Bottom A pattern occurring on the chart of a security where the daily low price is rising with each successive day. ; Rising bottoms signify increasing basic support levels and ascending tops.
Risk The chance that an investment's actual return will be different than expected. This includes the possibility of losing some or all of the original investment. It is usually measured using the historical returns or average returns for a specific investment.
Risk Adjusted Return A measure of how much risk a fund or portfolio took on to earn its returns, usually expressed as a number or a rating.
Risk Adjusted Return on Capital - RAROC In financial analysis, riskier projects and investments must be evaluated differently from their riskless counterparts. By discounting risky cashflows against less risky cashflows RAROC accounts for changes in the profile of the investment.
Risk Arbitrage The simultaneous purchase of stock in a company which is being acquired and the sale of stock in the acquiring company.
Risk Averse Describes an investor who, when faced with two investments with a similar expected return (but different risks), will prefer the one with the lower risk.
Risk Capital The money that a person allocates to investments in high risk securities.
Risk Free Asset An asset which has a certain future return. Treasuries (especially T-bills) are considered to be risk-free because they are backed by the U.S. government.
Risk Free Rate of Return The quoted rate on an asset that has virtually no risk.
Risk Lover An investor who is willing to take on additional risk for an investment that has a low expected return.
Risk Neutral A description of an investor who purposely overlooks risk when deciding between investments.
Risk Tolerance The degree of uncertainty that an investor can handle in regards to a negative change in the value of their portfolio.
Risk-Based Capital Requirement A stated requirement of liquid reserves placed upon banks and institutions that deal in risky ventures.
Risk-Weighted Assets In terms of the minimum amount of capital that is required within banks and other institutions, it is based a percentage of the assets, weighted by risk.
Risk/Return Trade-off A balance that an investor must establish between the desire for low risk and the lure high returns. Low levels of uncertainty (low risk) are associated with low potential returns, whereas high levels of uncertainty (high risk) are associated with high potential returns.
Riskless Principal Two transactions occurring at the same price that are recorded only once as an agency trade excluding all fees and markups or markdowns.
Road Show A presentation by an issuer of securities to potential buyers. It is intended to create interest in the securities.
Rocket Scientist 1. A person or investment firm that has crafted innovative and creative investment or risk management products.
2. An employee of a firm that works on major mathematical problems and performs quantitative analysis.
ROL In currencies, this is the abbreviation for the Romanian Leu.
Roll Back When an investor replaces an old options position with new one having an earlier expiration date (and the same strike price).
Roll Down When an investor replaces an old options position with new one at a lower strike price.
Roll Forward When an investor replaces an old options position with a new one having a later expiration date (and same strike price).
Roll Up 1. The move from one option position to another with a higher exercise price.
2. In the context of venture capital, when a VC forces small companies to merge in order to reduce costs.
Rollercoaster Swap A seasonal swap that provides flexibility of payments during predetermined periods approved by the parties involved.
Rolling EPS Measuring a company's EPS by using the previous 2 quarters and adding them to the following 2 quarter's estimated EPS.
Rolling Returns The annualized average return for a period ending with the listed year. Rolling returns are useful for examining the behavior of returns for holding periods similar to those actually experienced by investors.
Rollover 1. The process of reinvesting funds from a mature security into a new issue of the same or a similar security.
2. The process of transferring the holdings of one retirement plan to another without suffering tax consequences.
Roth IRA An individual retirement plan that bears many similarities to the Traditional IRA. Contributions are never deductible, and qualified distributions are tax-free. A qualified distribution is one that is taken at least five years after the taxpayer established his/her first Roth IRA and when he/she is age 59½, disabled, or using the withdrawal to purchase a first home (limit $10,000), or deceased (in which case the beneficiary collects).
Roth IRA Conversion A reportable movement of assets from a Traditional, SEP or SIMPLE IRA to a Roth IRA. The movement of assets may be taxable.
Round Lot The normal unit of trading for a security, which is generally 100 shares of stock.
Round Trip Transaction Costs All of the costs associated with completing a transaction.
Round-Trip Trades An action that attempts to inflate transaction volumes through the continuous and frequent purchase and sale of a particular security or commodity.
Royalty A payment to an owner for the use of property, especially patents, copyrighted works, franchises, or natural resources.
RUB In currencies, this is the abbreviation for the Russian Ruble.
Rubber Check Another name for a "bounced check," the check cannot be processed because the writer has insufficient funds.
Rule 144A An SEC rule that modified a two-year holding period requirement on privately placed securities by permitting Qualified Institutional Buyers (QIBs) to trade these positions among themselves.
Rule of 72 A rule stating that in order to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to double.
Rule of Eighteen A rule whereby the sum of the inflation rate and the P/E ratio of the Dow Jones Industrial Average is an indicator of the direction of the stock market. If the total is above 18, stocks are supposed to decrease. If the total is under 18, then the stock market is expected to increase.
Rumortrage A term often used by traders to refer to increased trading caused by a takeover rumor.
Rump The name given to the group of investors refusing to tender their shares into a corporate action, such as a merger or acquisition.
Run When a large amount of bank customers try to withdrawal their bank deposits simultaneously, and the bank's reserves are not sufficient to cover the withdrawals.