R
	Fifth letter of a Nasdaq stock symbol specifying that the stock has rights.
RAM
	See: Reverse-annuity mortgage
RAP
	See: Regulatory accounting procedures
REIT
	See: Real Estate Investment Trust
REMIC
	See: Real Estate Mortgage Investment Conduit
ROA
	See: Return on assets
ROE
	See: Return on equity
ROI
	See: Return on investment
RPPP
	See: Relative purchasing power parity
Radar alert
	Close monitoring of trading patterns in a company's stock by senior managers to uncover unusual buying activity that might signal a takeover attempt. See: Shark watcher.
Raider
	Individual or corporate investor who intends to take control of a company (often ostensibly for greenmail) by buying a controlling interest in its stock and installing new management. Raiders who accumulate 5% or more of the outstanding shares in the target company must report their purchases to the SEC, the exchange of listing, and the target itself. See: takeover.
Rainmaker
	A valuable employee or manager who buys new business to a financial services company and thus generates income.
Rally (recovery)
	An upward movement of prices. Opposite of reaction.
Reverse-annuity mortgages (RAM)
	Bank loan for an amount equal to a percentage of the appraisal value of the home. The loan is then paid to the homeowner in the form of an annuity.
Random variable
	A function that assigns a real number to each and every possible outcome of a random experiment.
Random walk
	Theory that stock price changes from day to day are accidental or haphazard; changes are independent of each other and have the same probability distribution. Many believers in the random walk theory believe that it is impossible to outperform the market consistently without taking additional risk.
Randomized strategy
	A strategy of introducing into the decision-making process a chance element that is designed to confound the information content of the decision-maker's observed choices.
Range
	The high and low prices, or high and low bids and offers, recorded during a specified time.
Range forward
	A forward exchange rate contract that places upper and lower bounds on the future cost of foreign exchange.
Rate anticipation swaps
	An exchange of bonds in a portfolio for new bonds that will achieve the target portfolio duration, given the investor's assumptions about future changes in interest rates.
Rate base
	The value of a regulated public utility and its operations as defined by its regulators and on which the company is allowed to earn a particular rate of return.
Rate covenant
	A provision governing a municipal revenue project financed by a revenue bond issue, which establishes the rates to be charged users of the new facility.
Rate of exchange
	See: Exchange Rate
Rate lock
	An agreement between the mortgage banker and the loan applicant guaranteeing a specified interest rate for a designated period, usually 60 days.
Rate of interest
	The rate, as a proportion of the principal, at which interest is computed.
Rate of return
	Calculated as the (value now minus value at time of purchase) divided by value at time of purchase. For equities, we often include dividends with the value now. See also: Return, annual rate of return.
Rate of return ratios
	Ratios that measure the profitability of a firm in relation to various measures of investment in the firm.
Rate risk
	In banking, the risk that profits may drop or losses occur because a rise in interest rates forces up the cost of funding fixed-rate loans or other fixed-rate assets.
Ratings
	An evaluation of credit quality of a company's debt issue by Moody's, S&P, and Fitch Investors Service. Investors and analysts use ratings to assess the riskness of an investment.
Ratio analysis
	A way of expressing relationships between a firm's accounting numbers and their trends over time that analysts use to establish values and evaluate risks.
Ratio writer
	An option writer who does not own the number of shares required to cover the call options he or she writes.
Rational expectations
	The idea that people rationally anticipate the future and respond today to what they see ahead. This concept was pioneered by Nobel Laureate, Robert E. Lucas, Jr.
Raw material
	Materials a manufacturer converts into a finished product.
Raw material supply agreement
	As used in connection with project financing, an agreement to furnish a specified amount per period of a specified raw material.
Reachback
	The ability of a tax shelter or limited partnership to deduct certain costs and expenses at the end of the year that were incurred throughout the entire year.
Reaction
	A decline in prices following an advance. Opposite of rally.
Reading the tape
	Judging the performance of stocks by monitoring changes in price as they are displayed on the ticker tape.
Real
	Used in the context of general equities. (1) natural, (2) not dividend roll-or program trading-related; (3) not tax-related. "Real" indications have three major repercussions: a) pricing will be more favorable to the other side of the trade since an investment bank is not committing any capital; b) price pressure will be stronger if real since a natural buyer/seller may have information leading to his decision or more behind it, and c) an uptick may be required for the trader to transact if the indication is not real and the trader has no long position.
Real assets
	Identifiable assets, such as land and buildings, equipment, patents, and trademarks, as distinguished from a financial investment.
Real capital
	Wealth that can be represented in financial terms, such as savings account balances, financial securities, and real estate.
Real cash flow
	Income expressed in current purchasing power terms.
Real estate
	A piece of land and whatever physical property is on it.
Real estate appraisal
	An estimate of the value of property using various methods.
Real estate broker
	An intermediary who receives a commission for arranging and facilitating the sale of a property for a buyer or a seller.
Real Estate Investment Trust (REIT)
	REITs invest in real estate or loans secured by real estate and issue shares in such investments. A REIT is similar to a closed-end mutual fund.
Real Estate Mortgage Investment Conduit (REMIC)
	A pass-through tax entity that can hold mortgages secured by any type of real property and can issue multiple classes of ownership interests to investors in the form of pass-through certificates, bonds, or other legal forms. A financing vehicle created under the Tax Reform Act of 1986.
Real exchange rates
	Exchange rates that have been adjusted for the inflation differential between two countries.
Real gain or loss
	A gain or loss adjusted for increasing prices by an inflation index such as the CPI.
Real income
	The income of an individual, group, or country adjusted for inflation.
Real interest rate
	The rate of interest excluding the effect of expected inflation; that is, the rate that is earned in terms of constant-purchasing-power dollars. Interest rate expressed in terms of real goods, i.e. nominal interest rate adjusted for expected inflation.
Realistic on price
	In trading, and indication that the size under consideration requires price give, especially with illiquid stocks. See: Takes price.
Realized profit (or loss)
	A capital gain or loss on securities held in a portfolio that has become actual by the sale or other type of surrender of one or many securities.
Real market
	The bid and offer prices at which a dealer could execute the desired quantity of shares. Quotes in the brokers market.
Real property
	Land plus all other property that is in some way attached to the land.
Real rate of return
	The percentage return on some investments that has been adjusted for inflation.
Real time
	A real-time stock or bond quote is one that states a security's most recent offer to sell or bid (buy). Different from a delayed quote, which shows the same bid and ask prices 15 minutes and sometimes 20 minutes after a trade takes place.
Realized compound yield
	Yield assuming that coupon payments are invested at the going market interest rate at the time of their receipt and held thus until the bond matures.
Realized return
	The return that is actually earned over a given time period.
Realtor
	A specific designation given to members of real estate firms affiliated with the National Association of Realtors (NAR) who are trained and licensed to assist clients in buying and selling real estate.
Rebalancing
	Realigning the proportions of assets in a portfolio as needed.
Rebate
	Negotiated return of a portion of the interest earned by the lender of stock to a short seller. When a stock is sold short, the seller borrows stock from an owner or custodian and delivers it to the buyer. The proceeds are delivered to the lender. The borrower, who is short, often wants a rebate of the interest earned on the proceeds under the lender's control, especially when the stock can be borrowed from many sources. Note: The seller must pay the lender any dividends paid out or, in the case of bonds, interest that accrues daily during the term of the loan.
Recapitalization proposal
	Often used in risk arbitrage. Plan by a target company to restructure its capitalization (debt and equity) in a way to ward off a hostile or potential suitor.
Recapture
	A provision in a contract that allows one party to recover (recapture) some degree of possession of an asset, such as a share of the profits derived from some property.
Receivables balance fractions
	The percentage of a month's sales that remains uncollected (and part of accounts receivable) at the end of succeeding months.
Receivables turnover ratio
	Total operating revenues divided by average receivables. Used to measure how effectively a firm is managing its accounts receivable.
Receiver
	A bankruptcy practitioner appointed by secured creditors to oversee the repayment of debts.
Receiver's certificate
	A debt instrument issued by a receiver and serving as a lien on the property, which provides funding to continue operations or to protect assets in receivership.
Receive versus payment
	An instruction that only cash will be accepted in exchange for delivery of securities.
Recession
	A temporary downturn in economic activity, usually indicated by two consecutive quarters of a falling GDP.
Reclamation
	A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process.
Record date
	(1) 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 five 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. (2) The date that determines who is entitled to payment of principal and interest due to be paid on a security. The record date for most MBS is the last day of the month, although the last day on which an MBS may be presented for the transfer is the last business day of the month. The record dates for CMOs and asset-backed securities vary with each issue.
Recourse
	Term describing a type of loan. If a loan is with recourse, the lender has a general claim against the parent company if the collateral is insufficient to repay the debt.
Recovery
	The use of depreciation of assets to offset costs; or a new period of rising securities prices after a period of declining security values.
Redemption date
	The date on which a bond matures or is redeemed.
Redemption price
	See: Call price
Red herring
	A preliminary prospectus providing information required by the SEC. It excludes the offering price and the coupon of the new issue.
Redeemable
	Eligible for redemption under the terms of an indenture.
Redemption
	Repayment of a debt security or preferred stock issue, at or before maturity, at par or at a premium price.
Redemption charge
	The commission a mutual fund charges an investor who is 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 decline or be eliminated as shares are held for longer time periods.
Redemption cushion
	The percentage by which the conversion value of a convertible security exceeds the redemption price (strike price).
Redemption or call
	Right of the issuer to force holders on a certain date to redeem their convertibles for cash. The objective usually is to force holders to convert into common prior to the redemption deadline. Typically, an issue is not called away unless the conversion price is 15%-25% below the current level of the common. An exception might occur when an issuer's tax rate is high, and the issuer could replace it with debt securities at a lower after-tax cost.
Rediscount
	To discount short-term negotiable debt instruments for a second time, after they have been discounted with a bank.
Red-lining
	Illegal discrimination in making loans, insurance coverage, or other financial services available to people or property in certain areas because of poor economic conditions, high levels of fraudulent transaction, or frequent defaults.
Reduction-Option Loan (ROL)
	A hybrid of a fixed-rate and adjustable-rate mortgage. An ROL the borrower to match the current mortgage rate, which then becomes fixed for the rest of the term. This reduction is usually allowed if rates drop more than 2% in a year.
Reference rate
	A benchmark interest rate (such as LIBOR) used to specify conditions of an interest rate swap or an interest rate agreement.
Refinancing
	An extension and/or increase in amount of existing debt.
Reflation
	Government monetary action that causes a reversal of deflation.
Refund
	To retire existing bond issues through the sale of a new bond issue, usually to reduce the interest rate being paid.
Refundable
	Eligible for refunding under the terms of a bond indenture.
Refunded bond
	Also called a prerefunded bond, a bond 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
	Redeeming a bond with proceeds received from issuing lower-cost debt obligations with ranking equal to or superior to the debt to be redeemed.
Refunding Escrow Deposits (REDs)
	A financial instrument involving a forward purchase contract that obligates investors to buy bonds at a certain rate when issued. The future date coincides with the first optional call date on an existing high-rate bond. In the interim, investors' money is invested in secondary market Treasury bonds. The Treasuries mature around the call date on the existing bonds, providing the money to buy the new issue and redeem the old one.
Regional bank
	A bank operating in a specific region of the country, taking deposits and offering loans.
Regional fund
	A mutual fund that invests in a specific geographic area overseas, such as Asia or Europe.
Regional stock exchanges
	Organized national securities exchanges located outside of New York City and registered with the SEC They include: the Boston, Cincinnati, Intermountain (Salt Lake City-dormant, owned by COMEX), Midwest (Chicago), Pacific (Los Angeles and San Francisco), Philadelphia (Philadelphia and Miami), and Spokane (local mining and Canadian issues, non-reporting trades) Stock Exchanges.
Registered bond
	A bond whose issuer records ownership and interest payments. Differs from a bearer bond, which is traded without record of ownership and whose possession is the only evidence of ownership.
Registered check
	A check issued and guaranteed by a bank for a customer who provides funds for payment of the check.
Registered company
	A company that is listed with the SEC after submission of a required statement and compliance with disclosure requirements.
Registered competitive market maker
	An NASD-registered dealer who acts as a market maker for a designated over-the-counter stock by buying and selling that stock to maintain stability.
Registered equity market maker
	Member firm of the American Stock Exchange registered as a trader to make stabilizing trades for its own account in particular securities.
Registered investment adviser
	SEC-registered individual or firm that substantiates completion of education and work experience in the field, and pays an annual membership fee.
Registered investment company
	An investment firm which is registered with the SEC and complies with certain stated legal requirements.
Registered options trader
	An American Stock Exchange specialist who monitors a certain group of options to help maintain a fair and orderly market.
Registered Retirement Savings Plan (RRSP)
	Tax-sheltered retirement plan for Canadian citizens, much like an American IRA.
Registered representative
	A person registered with the CFTC who is employed by and solicits business for a commission house or futures commission merchant.
Registered secondary offering
	A reoffering of a large block of securities, previously publicly issued, by the holder of a large portion of some corporation through an investment firm.
Registered security
	Used in the context of general equities. Securities whose owner's name is recorded on the books of the issuer or the issuer's agent, called a registrar.
Registered trader
	A member of the exchange who executes frequent trades for his or her own account.
Registrar
	Financial institution appointed to record issue and ownership of company securities.
Registration
	In the securities market describes process set up pursuant to the Securities Exchange Acts of 1933 and 1934 whereby securities that are to be sold to the public are reviewed by the SEC.
Registration statement
	A legal document filed with the SEC to register securities for public offering that details the purpose of the proposed public offering. The statement outlines financial details, a history of the company's operations and management, and other facts of importance to potential buyers. See: Registration.
Regression
	A mathematical technique 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. The a and b are chosen in a way to minimize the squared sum of the residuals. The ability to fit or explain is measured by the R-square.
Regression analysis
	A statistical technique that can be used to estimate relationships between variables.
Regression equation
	An equation that describes the average relationship between a dependent variable and a set of explanatory variables.
Regression toward the mean
	The tendency that a random variable will ultimately have a value closer to its mean value.
Regressive tax
	A tax system that provides that average tax rates decrease with increases in individuals' income brackets.
Regular settlement
	Transaction in which a stock contract is settled and delivered on the fifth full business day following the date of the transaction (trade date). In Japan, regular settlement occurs three business days following the trade date; in London, two weeks following the trade date (at times, three weeks); in France, once per month.
Regular way settlement
	In the money and bond markets, the standard basis on which some security trades are settled is that the delivery of the securities purchased is made against payment in Fed funds on the day following the transaction.
Regulated commodities
	The group of registered commodity futures and options contracts traded on organized U.S. futures exchanges.
Regulated investment company
	An investment company allowed to pass capital gains, dividends, and interest earned on fund investments directly to its shareholders so that it is taxed only at the personal level, and double taxation is avoided.
Regulation A
	A Federal Reserve Board regulation that exempts small public offerings, valued at less than $1.5MM from most registration requirements with the SEC.
Regulation D
	Federal Reserve Board regulation that currently requires member banks to hold reserves against their net borrowings from foreign offices of other banks over a 28-day averaging period. Regulation D has been merged with Regulation M.
Regulation G
	Federal Reserve Board regulation of lenders other than commercial banks, brokers, or dealers that provide credit for the purchase of or carrying of securities.
Regulation M
	Federal Reserve Board regulation that currently requires member banks to hold reserves against their net borrowings from their foreign branches over a 28-day averaging period. Reg M has also required member banks to hold reserves against Eurodollars lent by their foreign branches to domestic corporations for domestic purposes.
Regulation Q
	Federal Reserve Board regulation imposing caps on the rates that banks may pay on savings and time deposits. Currently time deposits with a denomination of $100,000 or more are exempt from Reg Q.
Regulation T
	Federal Reserve Board regulation that deals with granting credit to customers by securities brokers, dealers, and exchange member as far as initial margin requirements and securities that are covered under the rules.
Regulation U
	Federal Reserve Board limit on how much credit a bank can allow a customer for the purchase and carrying of margin securities.
Regulatory accounting procedures (RAP)
	Accounting principles required by the FHLB that allow S&Ls to elect annually to defer gains and losses on the sale of assets and amortize these deferrals over the average life of the asset sold.
Regulatory pricing risk
	Risk that arises when insurance companies are subject to regulation of the premium rates that can they charge.
Regulatory surplus
	The surplus as measured using regulatory accounting principles (RAP), which may allow the nonmarket valuation of assets or liabilities and which may be materially different from economic surplus.
Rehypothecation
	Pledging to banks by securities brokers of the amount in customers' margin account as collateral for broker loans, which are used to cover margin loans to customers for margin purchases and selling short.
Reimbursement
	Payment made to someone for out-of-pocket expenses has incurred.
Reinstatement
	The restoration of an insurance policy after it has lapsed for nonpayment of premiums.
Reinsurance
	The spreading of risk and division of client premiums among insurance companies allowing the sharing of the burden of a large risk.
Reinvestment privilege
	A shareholder's right to reinvest dividends and buy more shares in the corporation or mutual fund.
Reinvestment rate
	The rate at which an investor assumes interest payments made on a debt security can be reinvested over the life of that security.
Reinvestment risk
	The risk that proceeds received in the future may have to be reinvested at a lower potential interest rate.
Reinvoicing center
	A central financial subsidiary an MNC uses to reduce transaction exposure by billing all home country exports in the home currency and reinvoicing to each operating affiliate in that affiliate's local currency. It can also be used as a netting center.
Rejection
	Refusal by a bank to grant credit, usually because of the applicant's financial history, or refusal to accept a security presented to complete a trade, usually because of a lack of proper endorsements or violation of rules of a firm.
Relative purchasing power parity (RPPP)
	Idea that the rate of change in the price level of commodities in one country relative to the price level in another determines the rate of change of the exchange rate between the two countries' currencies.
Relative strength
	Movement of a stock price over the past year as compared to a market index (like the S&P 500). A 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 one-year period. Equation for Relative Strength: [current stock price/year-ago stock price] divided by [current S&P 500/year-ago S&P 500]. Note this can be a misleading indicator of performance because it does not take risk into account.
Relative value
	The attractiveness measured in terms of risk, liquidity, and return of one instrument relative to another, or, for a given instrument, of one maturity relative to another.
Relative yield spread
	The ratio of the yield spread to the yield level. Used for bonds.
Release
	Relieve party to a trade of any previously made obligation concerning that trade, hence allowing the would-be transactor to show the inquiry/order to a new broker.
Release clause
	A mortgage provision that releases a pledged asset after a certain portion of the total payments has been made.
Remainderman
	One who receives the principal of a trust when it is dissolved.
Remaining maturity
	The length of time remaining until a bond comes due
Remaining principal balance
	The amount of principal dollars remaining to be paid under a mortgage as of a given time.
Remargining
	Putting up additional cash or securities after a margin call on a brokerage customer's margin account so that it meets minimum maintenance requirements.
Rembrandt market
	The foreign market in the Netherlands.
Remit
	To pay for purchases by cash, check, or electronic transfer.
Remote disbursement
	Technique that involves writing checks drawn on banks in remote locations so as to maximize disbursement float.
Renewal
	Placement of a day order identical to one not completed on the previous day.
Renewable term life insurance
	A policy for a stated period that may be renewed if desired at the end of the term.
Rent
	Regular payments to an owner for the use of some leased property.
Rental lease
	See: Full-service lease
Rent control
	Municipal regulation restricting the amount of rent that a building owner can charge.
Reoffering yield
	In a purchase and sale, the yield to maturity at which an underwriter offers to sell bonds to investors.
Reopen an issue
	The Treasury, when it wants to sell additional securities, will occasionally sell more of an existing issue (reopen it) rather than offer a new issue.
Reorganization
	Creation of a plan to restructure a debtor's business and restore its financial health.
Reorganization bond
	A bond issued by a company undergoing a reorganization process.
Repatriation
	The return from abroad of the financial assets of an organization or individual.
Replacement cost
	Cost to replace a firm's assets.
Replacement cost accounting
	An accounting method that includes as part of depreciation the difference between the original purchase price of an asset and the current replacement cost.
Replacement cost insurance
	Insurance that pays out the full amount required to replace damaged property with new property, without taking into account the depreciated value of the property.
Replacement cycle
	The frequency with which an asset is replaced by an equivalent asset.
Replacement value
	Current cost of replacing the firm's assets.
Replacement-chain problem
	Idea that future replacement decisions must be taken into account in selecting among projects.
Replicating portfolio
	A portfolio constructed to match an index or benchmark.
Repo
	An agreement in which one party sells a security to another party and agrees to repurchase it on a specified date for a specified price. See: Repurchase agreement.
Report
	Written or oral confirmation that all or part of one's order has been executed, including the price and size parameters of the trade being reported; often followed by a fresh picture.
Reported factor
	The pool factor as reported by the bond buyer for a given amortization period.
Reporting currency
	The currency in which the parent firm prepares its own financial statements; that is, U.S. dollars for a U.S. company.
Reproducible assets
	A tangible asset with physical properties that can be matched or duplicated, such as a building or machinery.
Repurchase agreement
	An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. Also called a repo, it represents a collateralized short-term loan for which, where the collateral may be a Treasury security, money market instrument, federal agency security, or mortgage-backed security. From the purchaser's (customer's) perspective, the deal is reported as a reverse repo.
Repurchase of stock
	Technique to pay cash to firm's shareholders that provides more preferential tax treatment for shareholders than dividends. Treasury stock is the name given to previously issued stock that has been repurchased by the firm. A repurchase is achieved through either a Dutch auction, open market, purchase, or tender offer.
Required reserves
	The dollar amounts, based on reserve ratios, that banks are required to keep on deposit at a Federal Reserve Bank.
Required return
	The minimum expected return you would need in order to purchase an asset, that is, to make the investment.
Required yield
	Generally referring to bonds; the yield required by the marketplace to match available expected returns for financial instruments with comparable risk.
Rescheduled loans
	Bank loans that are usually altered to have longer maturities in order to assist the borrower in making the necessary repayments.
Rescind
	To cancel a contract because of misrepresentation, fraud, or illegal procedure.
Research and development (R"D)>
	Development of new products and services by a company in order to obtain a competitive advantage.
Research and development limited partnership
	A partnership whose investors put up money to finance new product R&D in return for profits generated from the products.
Research department
	The office in an institutional investing organizations that analyzes markets and securities.
Research portable
	Service offered to clients that transmits investment bank research electronically by computers.
Reserve
	An accounting entry that properly reflects contingent liabilities.
Reserve currency
	A foreign currency held by a central bank or monetary authority for the purposes of exchange intervention and the settlement of intergovernmental claims.
Reserve ratios
	Specified percentages of deposits, established by the Federal Reserve Board, that banks must keep in a noninterest-bearing account at one of the twelve Federal Reserve Banks.
Reserve requirements
	The percentage of different types of deposits that member banks are required to hold on deposit at the Fed.
Reset bonds
	Bonds that allow the initial interest rates to be adjusted on specific dates in order that the bonds trade at the value they had when they were issued.
Reset frequency
	The frequency with which the floating rate changes.
Residential mortgage
	Mortgage on a residential property, tax-deductible for individuals up to $1 million.
Residential property
	Property that consists of homes, apartments, townhouses, and condominiums.
Residual assets
	Assets that remain after sufficient assets are dedicated to meet all senior debtholders' claims in full.
Residual claim
	Related: Equity claim
Residual dividend approach
	An approach that suggests that a firm pay dividends if and only if acceptable investment opportunities for those funds are currently unavailable.
Residual method
	A method of allocating the purchase price for the acquisition of another firm among the acquired assets.
Residual risk
	Related: Unsystematic risk
Residuals
	(1) Part of stock returns not explained by the explanatory variable (the market index return). Residuals measure the impact of firm-specific events during a particular period. (2) Remainder cash flows generated by pool collateral and those needed to fund bonds supported by the collateral.
Residual value
	Usually refers to the value of a lessor's property at the time the lease expires.
Resistance level
	A price level above which it is supposedly difficult for a security or market to rise. Price ceiling at which technical analysts note persistent selling of a commodity or security. Antithesis of support level.
Resolution
	A document that records a decision or action by a board of directors, or a bond resolution by a government entity authorizing a bond issue.
Resolution Funding Corporation (RefCorp)
	A government agency established by Congress in 1989 to issue bailout bonds and raise funds for the activities of the Resolution Trust Corporation, as well as to administer struggling institutions inherited from the disbanded Federal Savings and Loan Corporation.
Resolution Trust Corporation (RTC)
	A government agency established in 1989 and disbanded in 1996 that administered federal savings and loan institutions that were insolvent between 1989 and August 1992 by either bailing them out or merging them.
Restricted
	Placed on a list that dictates that the trader may not maintain positions, solicit business, or provide indications in a stock, but may serve as broker in agency trades after being properly cleared. Traders are so restricted due to investment bank involvement with the company on nonpublic activity (i.e., mergers and acquisitions defense), affiliate ownership, or underwriting activities; signified on the Quotron by a flashing "R." A restricted list and the stocks on it should never be conveyed to anyone outside of the trading areas, much less outside the firm. See: Grey list.
Restricted account
	A margin account without enough equity to meet the initial margin requirement that is restricted from any purchases until the requirement is fulfilled.
Restricted surplus
	A portion of retained earnings not allowed by law to be used for the payment of dividends.
Restricted stock
	Stock that must be traded in compliance with special SEC regulations concerning its purchase and resale. These restrictions generally result from affiliate ownership, M&A activity, and underwriting activity.
Restrictive covenants
	Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends.
Restrictive endorsement
	An endorsement signature on the back of a check that specifies the conditions under which the check can be transferred or paid out.
Restructuring
	The reorganization of a company in order to attain greater efficiency and to adapt to new markets.
Resyndication limited partnership
	The sale of existing properties to new limited partners, so that they can receive the tax advantages that are no longer available to the old partners.
Retail
	Individual and institutional customers as opposed to dealers and brokers.
Retail credit
	Credit granted by a firm to consumers for the purchase of goods or services. See: consumer credit.
Retail house
	A brokerage firm that caters to individual customers rather than large institutions.
Retail investors
	Small individual investors who commit capital for their personal account rater than on behalf of another company.
Retail price
	The total price charged for a product sold to a customer, which includes the manufacturer's cost plus a retail markup.
Retained earnings
	Accounting earnings that are retained by the firm for reinvestment in its operations; earnings that are not paid out as dividends.
Retained earnings statement
	A statement of all transactions affecting the balance of a company's retained earnings account.
Retention
	The number of units allocated to an underwriting syndicate member less the units held back by the syndicate manager for facilitating institutional sales and for allocation to nonmember firms.
Retention rate
	The percentage of present earnings held back or retained by a corporation, or one minus the dividend payout rate. Also called the retention ratio.
Retire
	To extinguish a security, as in paying off a debt.
Retirement
	Removal from circulation of stock or bonds that have been reacquired or redeemed.
Retirement Protection Act of 1994
	Legislation designed to protect the pension benefits of workers and retirees by increasing required support of pension plans by employers.
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 of capital
	A cash distribution resulting from the sale of a capital asset, or securities, or tax breaks from depreciation.
Return on assets (ROA)
	Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets).
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. ROE may be decomposed into return on assets (ROA) multiplied by financial leverage (total assets/total equity).
Return on investment (ROI)
	Generally, book income as a proportion of net book value.
Return on sales
	A measurement of operational efficiency equaling net pre-tax profits divided by net sales expressed as a percentage.
Return on total assets
	The ratio of earnings available to common stockholders to total assets.
Return-to-maturity expectations
	A variant of pure expectations theory that suggests that the return 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.
Reuters
	International news and quotation service based in London.
Revaluation
	An increase in the foreign exchange value of a currency that is pegged to other currencies or gold.
Revenue Anticipation Note (RAN)
	A short-term municipal debt issue that will be repaid with anticipated revenues, such as sales taxes, from the project.
Revenue bond
	A bond issued by a municipality to finance either a project or an enterprise in which the issuer pledges to the bondholders the revenues generated by the operation of the projects financed. Examples are hospital revenue bonds and sewer revenue bonds.
Revenue fund
	A fund accounting for all revenues from an enterprise financed by a municipal revenue bond.
Revenue Reconciliation Act of 1993
	Legislation created to reduce the federal budget deficit by cutting spending and increasing taxes.
Revenue sharing
	The percentage split between the general partner and limited partners of profits and losses resulting from the operation of the involved business.
Reversal
	Turn, unwind. For convertible reversal, selling a convertible and buying the underlying common, usually effected by an arbitrageur. For market reversal, change in direction in the stock or commodity futures markets, as charted by technical analysts in trading ranges. For options reversal, closing the positions of each aspect of an options spread or combination strategy.
Reverse a swap
	Reswap of bonds to gain the advantage of a yield spread or tax loss and restore a bond portfolio to its position before the original swap.
Reverse conversion
	A technique in which brokerage firms earn interest on the stocks they hold for their customers by selling the short and investing the proceeds in money market accounts. The short positions are hedged to protect against adverse market conditions.
Reverse leverage
	Occurs when the interest on borrowings exceeds the return on investment of the funds that were borrowed.
Reverse leveraged buyout
	Bringing back into publicly traded status a company that had been privatized by way of a leveraged buyout.
Reverse mortgage
	A mortgage agreement allowing a homeowner to borrow against home equity and receive tax-free payments until the total principal and interest reach the credit limit of equity, and the lender is either repaid in full or takes the house.
Reverse price risk
	A type of mortgage pipeline risk that occurs when a lender commits to sell loans to an investor at rates prevailing at the time of mortgage application but sets the note rates when the borrowers closes. The lender is thus exposed to the risk of falling rates.
Reverse repo
	In essence, refers to a repurchase agreement. From the customer's perspective, the customer provides a collateralized loan to the seller.
Reverse stock split
	A proportionate decrease in the number of shares, but not the total 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 one share for every three shares owned before the split. After the reverse split, the firm's stock price is, in this example, three times the pre-reverse split price. A firm generally institutes a reverse split to boost its stock's market price. Some think this supposedly attracts investors.
Reversing trade
	Entering the opposite side of a currently held futures position to close out the position.
Revisionary trust
	An irrevocable trust that becomes a revocable trust after a certain amount of time.
Revocable trust
	A trust that may altered as many times as desired in which income-producing property passes directly to the beneficiaries at the time of the grantor's death. Since the arrangement can be altered at any time, the assets are considered part of the grantor's estate and they are taxed as such.
Revolving credit agreement
	A legal commitment in which a bank promises to lend a customer up to a specified maximum amount during a specified period.
Revolving line of credit
	A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years.
Reward-to-volatility ratio
	Ratio of excess return to portfolio standard deviation.
Rich
	Term for a security whose price seems too high in light of its price history.
RICO
	Stands for Racketeer Influenced and Corrupt Organization Act. Legislation under/which inside traders may be convicted.
Rider
	A form accompanying an insurance policy that alters the policy's terms or coverage.
Riding the yield curve
	Buying long-term bonds in anticipation of capital gains as yields fall with the declining maturity of the bonds.
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
	Law permitting interstate banking in the U.S.
Rigged market
	Manipulation of prices in a market to attract buyers and sellers.
Right
	Privilege granted shareholders of a corporation to subscribe to shares of a new issue of common stock before it is offered to the public. Such a right, which normally has a life of two to four weeks, is freely transferable and entitles the holder to buy the new common stock below the public offering price. See: Warrant.
Right here
	Used in the context of general equities. In-line, emphasizing that this is a customer inquiry that is ready to be executed and not distant on price. See: Tight.
Rights offering
	Issuance to shareholders that allows them to purchase additional shares, usually at a discount to market price. Holdings of shareholders who do not exercise rights are usually diluted by the offering. Rights are often transferable, 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.
Right of first refusal
	The right of a person or company to purchase some thing before the offering is made to others.
Right of redemption
	The right to recover property that has been attached by paying off the debt .
Right of rescission
	The right to void a contract without any penalty within three days as provided in the Consumer Credit Protection Act of 1968.
Rights-on
	Shares trading with rights attached to them.
Rings
	Trading arenas located on the floor of an exchange in which traders execute orders. Sometimes called a pit.
"Ring the cash register"
	Used in the context of general equities. "Take a profit." See: Profit taking.
Rising bottoms
	Chart pattern showing an increasing trend in the daily low prices of a security or commodity.
Risk
	Often defined as the standard deviation of the return on total investment. Degree of uncertainty of return on an asset. In context of asset pricing theory. See: Systematic risk.
Risk-adjusted discount rate
	The rate established by adding an expected risk premium to the risk-free rate in order to determine the present value of a risky investment.
Risk-adjusted profitability
	A probability used to determine a "sure" expected value (sometimes called a certainty equivalent) that would be equivalent to the actual risky expected value.
Risk-adjusted return
	Often we subtract from the rate of return on an asset a rate of return from another asset that has similar risk. This gives an abnormal rate of return that shows how the asset performed over and above a benchmark asset with the same risk. We can also use the beta against the benchmark to calculate an alpha, which is also risk-adjusted performance.
Risk arbitrage
	Traditionally, the simultaneous purchase of stock in a company being acquired and the sale of stock of the acquirer. Modern risk arbitrage focuses on capturing the spreads between the market value of an announced takeover target and the eventual price at which the acquirer will buy the target's shares.
Risk-averse
	Describes an investor who, when faced with two investments with the same expected return but different risks, prefers the one with the lower risk.
Risk-based capital ratio
	Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset.
Risk classes
	Groups of projects that have approximately the same amount of risk.
Risk controlled arbitrage
	A self-funding, self-hedged series of transactions that generally use mortgage securities (MBS) as the primary assets.
Risk factor
	In arbitrage pricing theory or the multibeta capital asset pricing model, the set of common factors that impact returns, e.g., market return, interest rates, inflation, or industrial production.
Risk indexes
	Categories of risk used to calculate fundamental beta, including (1) market variability, (2) earnings variability, (3) low valuation, (4) immaturity and smallness, (5) growth orientation, and (6) financial risk.
Riskless arbitrage
	The simultaneous purchase and sale of the same asset to yield a profit.
Riskless or risk-free 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.
Riskless rate
	The rate earned on a riskless investment, typically the rate earned on the 90-day U.S. Treasury Bill.
Riskless rate of return
	The rate earned on a riskless asset.
Riskless transaction
	A transaction that is guaranteed a profit, such as the arbitrage of a temporary differential between commodity prices in two different markets. The evaluation of whether dealer markups and markdowns in OTC transactions are reasonable. According to NASD, markups or markdowns should not exceed 5%.
Risk lover
	A person willing to accept lower expected returns on prospects with higher amounts of risk.
Risk management
	The process of identifying and evaluating risks and selecting and managing techniques to adapt to risk exposures.
Risk-neutral
	Insensitive to risk.
Risk-prone
	Willing to pay money to assume risk from others.
Risk premium
	The reward for holding the risky equity market portfolio rather than the risk-free asset. The spread between Treasury and non-Treasury bonds of comparable maturity.
Risk premium approach
	A common approach for tactical asset allocation to determine the relative valuation of asset classes based on expected returns.
Risk-return trade-off
	The basic concept that higher expected returns accompany greater risk, and vice versa.
Risk-reward ratio
	Relationship of substantial reward corresponding to the amount of risk taken; mathematically represented by dividing the expected return by the standard deviation.
Risk transfer
	The shifting of risk through insurance or securitization of debt because of risk aversion.
Risky asset
	An asset whose future return is uncertain.
Risk-adjusted return
	Return earned on an asset normalized for the amount of risk associated with that asset.
Risk-free asset
	An asset whose future normal return is known today with certainty.
Risk-free rate
	The rate earned on a riskless asset.
Road show
	A promotional presentation by an issuer of securities to potential buyers about the desirable qualities of the investments.
Rotation
	An active asset management strategy that tactically overweighted and underweighted certain sectors, depending on expected performance. Sometimes called sector rotation.
Rocket scientist
	An employee of an investment firm (often having a Ph.D. in physics or mathematics) that works on highly mathematic models of derivative pricing.
Roll down
	To move to an option position with a lower exercise price.
Roll forward
	To move to an option position with a later expiration date.
Roll, Richard
	Author of path-breaking work on asset pricing including the famous Roll critique. Finance professor at UCLA.
Roll order
	(1) Dividend roll; (2) Replacement of a maturing position with an identical one in the new maturity; (3) Recognizition of capital gain or loss while reestablishing the position at the risk of the market.
Roll over
	To reinvest funds received from a maturing security in a new issue of the same or a similar security.
Rollover
	Means that a loan is periodically repriced at an agreed spread over the appropriate, currently prevailing rate. Most term loans in the Euromarket are made on a rollover basis as to current LIBOR rate.
Roll up
	To move to an option position with a higher exercise price. In venture capital, refers to the venture capitalist forcing small firms to merge operations in order to reduce costs
Ross, Stephen
	Developer of the Arbitrage Pricing Theory. Finance professor at MIT.
Roth IRA
	Individual Retirement Account that allows contributors to invest up to $2,000 per year, and to withdraw the principal and earnings totally tax-free under certain conditions.
Round lot
	A trading order typically of 100 shares of a stock or some multiple of 100. Related: odd lot.
Round-trip trade
	The purchase and sale of a security within a short period of time.
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.
Royalty
	Payment for the right to use intellectual property or natural resources.
Rubber check
	A check that bounces for lack of funds.
R square (R2)
	Square of the correlation coefficient. The proportion of the variability in one series that can be explained by the variability of one or more other series a regression model. A measure of the quality of fit. 100% R-square means perfect predictability.
Rule 13-d
	Often used in risk arbitrage. Requirement under Section 13-d of the Securities Act of 1934 that a form must be filed with the SEC within ten business days of acquiring direct or beneficial ownership of 5% or more of any class of equity securities in a publicly held corporation. The purchaser of such stock must also file a 13-d with the stock exchange on which the shares are listed (if any) and the company itself. Required information includes the way the shares were acquired, the purchaser's background, and future plans regarding the target company. The law is designed to protect against insidious takeover attempts and to keep the investing public aware of information that could affect the price of their stock. See: Williams Act.
Rule 14-d
	Often used in risk arbitrage. Regulations and restrictions covering public tender offers and related disclosure requirements.
Rule 144
	Restricts solicitation of buyers to complete the sell order of an insider (unless the firm is already a buyer); signified by a flashing "E" on Quotron.
Rule 144a
	SEC rule allowing qualified institutional buyers to buy and trade unregistered securities.
Rule 405
	NYSE codification of "know your customer" rules, which require that a customer's situation is suitable for any investment being made.
Rule 415
	Permits corporations to file a registration for securities they intend to issue in the future when market conditions are favorable. See: Shelf registration.
Rule of 72
	A formula used to determine the amount of time it will take for invested money to double at a given compound interest rate, which is 72 divided by the interest rate.
Rules of fair practice
	Rules established by the NASD that lay down guidelines for just and equitable principles of trade and business in securities markets.
Rumortrage
	A term combining the words "rumor" and arbitrage, used to describe trading that occurs on the basis of rumors of a takeover.
Rump
	Usually used in the context of a merger or acquisition. A group of shareholders who refuse to tender their shares for a merger or acquisition. In a merger of Company A and Company B for example, if a sufficient number of Company B shareholders do not tender their shares, the new company will not be able to access the cash flows of Company B.
Run
	A run consists of a series of bid and offer quotes for different securities or maturities. Dealers give and ask for runs from each other.
Rundown
	A summary of the amount and prices of a serial bond issue that is still available for purchase.
Running ahead
	The illegal practice of trading in a security for a broker's personal account before placing an order for the same security for a customer.
Runoff
	Used for listed equity securities. Series of trades printed on the ticker tape that occur on the NYSE before 4:00 p.m., but are not reported until afterwards due to heavy trading that makes the tape late.
Russell Indexes
	U.S. equity index widely used by pension and mutual fund investors that are weighted by market capitalization and published by the Frank Russell Company of Tacoma, Washington. For example, the Russell 3000 index includes the 3,000 largest U.S. companies according to market capitalization.
Russian Trading System (RTS)
	An electronic system in Russia, like the Nasdaq system on which the majority of Russian equities trading is conducted.