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Rally
An upward movement of prices
. Opposite of recovery. Related:
Recovery
Range
The high and low prices, or high and low bids and offers recorded during a specified time.
Rate anticipation swaps
An exchange of bonds in a portfolio
for new bonds that will achieve the target portfolio duration, based on the investor's assumptions about future changes in interest
rates.
Reaction
A decline in prices
following an advance. Opposite of rally
.
Real time
A real timestock or bond
quote is one that states a security's most recent offer to sell or bid
to buy. A delayed quote shows the same bid and ask
prices
15 minutes and sometimes 20 minutes after a trade
takes place.
Record date
Date by which a shareholder must officially own shares
in order to be entitled to a dividend
. For example, a firm might declare a dividend on Nov 1, payable Dec 1 to holders of record Nov 15. Once a trade
is executed an investor
becomes the "owner of record" on settlement, which currently takes 5 business days for securities, and one business day for mutual funds. Stocks trade ex-dividend
the fourth day before the record date, since the seller will still be the owner of record and is thus entitled to the dividend.
Redemption charge
The commission
charged by a mutual fund
when redeeming shares
. For example, a 2% redemption charge (also called a "back end load") on the sale of shares valued at $1000 will result in payment of $980 (or 98% of the value) to the investor
. This charge may decrease or be eliminated as shares are held for longer time periods.
Reference rate
A benchmark
'interest rate (such as LMOR), used to specify conditions of an interest rate swap
or an interest rate agreement
.
Refunded bond
Also called a prerefunded bond, one that originally may have been issued as a general obligation or revenue bond
but that is now secured by an "escrow fund" consisting entirely of direct U.S.government obligations that are sufficient for paying the bondholders.
Refunding
The redemption of a bond
with proceeds received from issuing lower-cost debt obligations ranking equal to or superior to the debt to he redeemed.
Registered representative
A person registered with the CFTC
who is employed by, and soliciting business for, a commission house
or futures commission merchant
.
Regression analysis
A statistical technique that can be used to estimate relationships between variables.
Regulatory pricing risk
Risk that arises when regulators restrict the premium
rates that insurance companies can charge.
Regulatory surplus
The surplus as measured using regulatory accounting principles (RAP) which may allow the non-market valuation of assets or liabilities and which may be materially different from economic surplus
.
Reinvestment risk
The risk that proceeds received in the future will have to be reinvested at a lower potential interest
rate.
Relative strength
A stock's price movement over the past year as compared to a market index (the S&P 500). Value below 1.0 means the stock shows relative weakness in price movement (underperformed the market); a value above 1.0 means the stock shows relative strength
over the 1-year period. Equation for Relative Strength: [current stock price/year-ago stock price] [current S&P 500/year-ago S&P 500]
Relative yield spread
The ratio of the yield
spread
to the yield level.
Rembrandt market
The foreign market
in the Netherlands.
Replicating portfolio
A portfolio
constructed to match an index or benchmark
.
Reproducible assets
A tangible asset
with physical properties that can be reproduced, such as a building or machinery.
Repurchase agreement
An agreement with a commitment
by the seller to buy a security
back from the purchaser at a specified price at a designated future date. Also called a repo, it represents a collateralized short-term loan, where the collateral may be a Treasury security, money market
instrument, federal agency security, or mortgage-backed security.
Required reserves
The dollar amounts based on reserve
ratios that banks are required to keep on deposit at a Federal reserve
Bank.
Required yield
Generally referring to bonds, the yield
required by the marketplace to match available returns for financial instruments with comparable risk.
Reserve
An accounting entry that properly reflects the contingent liabilities of an insurance company.
Reserve ratios
Specified percentages of deposits, established by the Federal Reserve
Board, that banks must keep in a non-interest-bearing account at one of the twelve Federal Reserve Banks.
Reset frequency
The frequency with which the floating rate changes.
Residual claim
Related:
equity claim
Residual risk
Related:
unsystematic risk
Retail investors individual investors
Institutional investors
Retention rate
The percentage of present earnings
held back or retained by a corporation.
Retracement
A price movement in the opposite direction of the previous trend
.
Return
The change in the value of a portfolio
over an evaluation period, including any distributions
made from the portfolio during that period.
Return On Assets (ROA)
Indicator of profitability. Determined by dividing net income
for the past 12 months by total assets. Result is shown as a percentage.
Return On Equity (ROE)
Indicator of profitability. Determined by dividing net income
for the past 12 months by common stockholder equity
(adjusted for stock splits). Result is shown as a percentage. Investors use ROE as a measure of how a company is using its money.
Return on total assets
The ratio of earnings
available to common stock holders to total assets.
Return-to-maturity expectations
A variant of pure expectations theory
which suggests that the return
that an investor
will realize by rolling over short-term bonds to some investment horizon will be the same as holding a zero-coupon bond
with a maturity that is the same as that investment horizon.
Revenue bond
A bond
issued by a municipality to finance either a project or an enterprise where the issuer
pledges to the bondholders the revenues generated by the operating projects financed, for instance, hospital revenue bonds and sewer revenue bonds.
Revenue fund
A fund accounting for all revenues from an enterprise financed by a municipal revenue bond
.
Reverse stock split
A proportionate decrease in the number of shares, but not the value of shares
of stock held by shareholders. Shareholders maintain the same percentage of equity
as before the split
. For example, a 1-for-3 split would result in stockholders owning 1 share for every 3 shares owned before the split. A firm generally institutes a reverse split to boost its stock's market price and attract investors.
Rights offering
Issuance of "rights" to current shareholders allowing them to purchase additional shares, usually at a discount
to market price. Shareholders who do not exercise
these rights are usually diluted by the offering. Rights are often transferrable, allowing the holder to sell them on the open market to others who may wish to exercise them. Rights offerings are particularly common to closed end funds, which cannot otherwise issue
additional common stock.
Rings
Trading arenas located on the floor of an exchange in which traders execute orders. Sometimes called a pit
.
Risk averse
A risk-averse investor
is one who when faced with two investments with the same expected return
but two different risks will prefer the one with the lower risk.
Risk indexes
Categories of risk used to calculate fundamental beta, including (1) market variability, (2) earnings
variability, (3) low valuation and unsuccess, (4) immaturity and smallness, (5) growth orientation, and (6) financial risk
.
Risk premium
The reward for holding the risky market portfolio
rather than the risk-free asset
. The spread
between Treasury and non-Treasury bonds of comparable maturity.
Risk premium approach
The most common approach for tactical asset
allocation to determine the relative valuation of asset classes
based on expected returns.
Risk-free or riskless asset
An asset
whose future return
is known today with certainty. The risk free asset is commonly defined as short-term obligations of the U.S.government.
Risky asset
An asset
whose future return
is uncertain.
Round lot
A trading order typically of 100 shares
of a stock or some multiple of 100. Related:
odd lot
Round-trip transactions costs
Costs of completing a transaction, including commissions, market impact costs, and taxes.
Round-turn
Procedure by which the Long or short position
of an individual is offset
by an opposite transaction or by accepting or making delivery
of the actual financial instrument or physical commodity
.
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