| R | Fifth letter of a Nasdaq stock symbol specifying that the stock has rights. |
| 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. |
| Rack rent | Commonly used to mean the full open market rent. |
| 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 outstandingshares 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, manager or subcontracted person who brings new business to a company. |
| Rally (recovery) | An upward movement of prices. Opposite of reaction. |
| RAM | See: Reverse-annuity mortgage |
| 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 ratecontract that places upper and lower bounds on the future cost of foreign exchange. |
| Ransom strip | A piece of land adjacent to a main site often forming part of an accessway or other essential part of the site. The owner of the ransom strip can extract an inflated price for the strip because of its importance to the use of the main site. |
| RAP | See: Regulatory accounting procedures |
| Rate anticipation swaps | An exchange of bonds in a portfolio for new bonds that will achieve the target portfolioduration, given the investor's assumptions about future changes in interest rates. |
| Rate base | The value of a regulatedpublicutility 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 bondissue, which establishes the rates to be charged users of the new facility. |
| 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 exchange | See: Exchange Rate |
| Rate of interest | The rate, as a proportion of the principal, at which interest is computed. |
| Rate of return | Calculated as the (value nowminus 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 fundingfixed-rate loans or other fixed-rate assets. |
| Rate-lock selling | Underwriters of corporate bonds sell Treasuries to hedge what they will take in a planned underwriting. |
| Ratings | An evaluation of credit quality of a company'sdebtissue by Thomson Financial BankWatch, Moody's, S&P, and Fitch Investors Service. Investors and analysts use ratings to assess the riskness of an investment. Ratings can also be an evaluation a country's creditworthiness or ability to repay, taking into consideration its estimated percentage default rate and political risk. |
| 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 Calendar Combination | A strategy consisting of a simultaneous position of a ratio calendar spread using "calls" and a similar position using puts, where the striking price of the "calls" is greater that the striking price of the "puts". |
| Ratio Calendar Spread | Selling more near-termoptions than longer-term ones purchased, all with the same strike; either puts or calls. |
| Ratio Spread | Constructed with either puts or calls, the strategy consists of buying a certain amount of options and then selling a larger quantity of more out-of-the-money options. |
| Ratio Strategy | A strategy in which one has an unequal number of long secruities and short sercurities. Normally, it implies a preponderance of short options over either long options or long stock. |
| 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. |
| RE | The two-character ISO 3166 country code for REUNION. |
| 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 naturalbuyer/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 appreciation/depreciation | A change in the purchasing power of a currency. |
| Real assets | Identifiable assets, such as land and buildings, equipment, patents, and trademarks, as distinguished from a financialinvestment. |
| Real body | On a candlestick line, it is the broad part consisting of the difference between opening and closing prices. |
| 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 Currency | The purchasing power in today's currency of future nominal currency to be disbursed or received. |
| 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 issueshares 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 holdmortgages 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 inflationindex such as the CPI. |
| Real GDP | Inflation-adjusted measure of Gross Domestic Product. |
| 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. |
| Real market | The bid and offer prices at which a dealer could execute the desired quantity of shares. Quotes in the brokersmarket. |
| Real option | An option or option-like feature embedded in a realinvestment opportunity. |
| Real property | Land. |
| 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 return | The actual payback on an investment after removing the effect of inflation. |
| Real time | A real-time stock or bondquote 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 askprices 15 minutes and sometimes 20 minutes after a trade takes place. |
| Realistic on price | In trading, and indication that the size under consideration requires price give, especially with illiquidstocks. See: Takes price. |
| Realized compound yield | Yield assuming that coupon payments are invested at the going marketinterest rate at the time of their receipt and held thus until the bondmatures. |
| 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. |
| Realized return | The return that is actually earned over a given time period. |
| Realized volatility | Sometimes referred to as the historical volatility, this term usually used in the context of derivatives. While the implied volatility refers to the market's assessment of future volatility, the realized volatility measures what actually happened in the past. The measurement of the volatility depends on the particular situation. For example, one could calculate the realized volatility for the equity market in March of 2003 by taking the standard deviation of the daily returns within that month. One could look at the realized volatility between 10:00AM and 11:00AM on June 23, 2003 by calculating the standard deviation of one minute returns. |
| Realized yield | The holding-period return actually generated from an investment in a bond. |
| Realtor | A specific designation given to members of real estatefirms 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. |
| Recalculation method | A method of calculating required minimum distributions from a retirement plan using life expectancy tables. Unisex data tables allow a plan holder to determine the applicable life expectancy each year a distribution is required. |
| 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. |
| Receipts | Funds collected from selling land, capital, or services, as well as collections from the public (budget receipts), such as taxes, fines, duties, and fees. |
| 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. |
| Receive fixed counterparty | The transactor in an interest rate swap who receives payments based on the fixed rate and makes payments based on the floating rate. |
| Receive floating counterparty | The transaction in an interest rate swap who receives payments based on the floating rate and makes payments based on the fixed rate. |
| Receive versus payment | An instruction that only cash will be accepted in exchange for delivery of securities. |
| Received for Shipment Bill of Lading | A document issued by a carrier that looks like a bill of lading as evidence of receipt of goods for shipment. This type of document is issued prior to the vessel loading and is therefore not an on board bill of lading. |
| Receiver | There are two types of receiver. An administrative receiver is a receiver or manager appointed under a floating charge which extends to all or substantially all of the assets of the company giving the floating charge. The term is defined in the Insolvency Act 1986. An administrative receiver has extensive powers to manage the company and must be a qualified insolvency practitioner. A creditor who appoints an administrative receiver prior to the hearing of an administration petition can prevent the appointment of an administrator. This is a desirable power as an administrator is able to block the exercise by a lender of its security. A fixed charge or LPA receiver is a receiver appointed over specific assets. This type of receiver is appointed pursuant to the Law of Property Act 1925. Its powers are limited to those conferred by that Act. More particularly it does not have the power to sell. The charge therefore needs to expand the statutory powers and most modern charges do this. This is an important point to watch in older charges. If the charge is defective and has no power of sale it is also possible to make an application to the court to appoint a receiver if the bank can show that the loan is in jeopardy. |
| Receiver | A bankruptcy practitioner appointed by securedcreditors 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. |
| Recession | A temporary downturn in economic activity, usually indicated by two consecutive quarters of a falling GDP. |
| Recharacterization | The reversal of a traditional IRAcontribution or conversion into a Roth IRA, or vice versa. |
| Reciprocal marketing agreement | A strategic alliance in which two companies agree to comarket each other's products. Production rights may or may not be transferred. |
| Recission | The right to put an end to a contract. |
| 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. |
| Record Owner | The stockholder of record as distinguished from the beneficial owner. |
| Recordholder | The individual or institution listed on the corporation'sbooks as a securityholder as of a specified record date. |
| Recourse | Term describing a type of loan. If a loan is with recourse, the lender has a the ability has the ability to fall back to the guarantor of the loan if the borrower fails to pay. For example, Bank A has a loan with Company X. Bank A sells the loan to Bank B with recourse. If Company X defaults, Bank B can demand Bank A fulfill the loan obligation. |
| 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. |
| Red Book | The colloquial name for the ‘Appraisal and Valuation Manual’ published by the Royal Institution of Chartered Surveyors. |
| 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 debtsecurity or preferred stockissue, at or before maturity, at par or at a premium price. |
| Redemption charge | The commission a mutual fund charges an investor who is redeemingshares. 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 date | The date on which a bondmatures or is redeemed. |
| Redemption fee | A fee some mutual funds charge when an investor sells shares within a specified short period of time. |
| 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. |
| Redemption price | See: Call price |
| Rediscount | To discountshort-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 matches the borrower to 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 bondissues through the sale of a new bondissue, 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-costdebtobligations with ranking equal to or superior to the debt to be redeemed. |
| Refunding Escrow Deposits (REDs) | A financialinstrument involving a forwardpurchasecontract that obligates investors to buybonds 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 marketTreasury 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 offeringloans. |
| Regional Check Processing Center (RCPC) | A Federal Reserve check processing operation that clears checks drawn on depository institutions located within a specified area. RCPCs expedite collection and settlement of checks within the area on an overnight basis. |
| 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 disclosurerequirements. |
| Registered competitive market maker | An NASD-registereddealer 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 Exchangespecialist who monitors a certain group of options to help maintain a fair and orderly market. |
| Registered Owner | An individual or organization to whom certificates are directly issued and who, as a result, is recorded on the corporation's securityholder records (as maintained by the transfer agent). |
| Registered representative | A person registered with the CFTC who is employed by and solicits business for a commission house or futures commission merchant. |
| Registered Retirement Savings Plan (RRSP) | Tax-shelteredretirement plan for Canadian citizens, much like an American IRA. |
| 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 Shares | Shares that are issued in a shareholder's name as the holder of record. |
| Registered social landlord | A body registered with the housing corporation to enable it to obtain public finance. |
| 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 coefficient | Term yielded by regression analysis that indicates the sensitivity of the dependent variable to a particular independent variable. See: Parameter. |
| 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 stockcontract 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 bondmarkets, the standard basis on which some securitytrades 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 registeredcommodity futures and options contractstraded on organized U.S. futuresexchanges. |
| 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 | An exemption from the Securities Act of 1933 that exempts small public offerings, valued at less than $1.5MM from most registration requirements with the SEC. |
| Regulation D | There are two Regulation Ds. First, it refers to the exemption from the Securities Act of 1933 for Private Placements. These placements are exempt from registration and prospectusdelivery requirements. Second, it refers to a Federal Reserve Boardregulation that currently requires member banks to holdreserves against their netborrowings from foreign offices of other banks over a 28-day averaging period. Regulation D has been merged with Regulation M. |
| Regulation FD (fair disclosure) | U.S. S.E.C.regulation whose purpose is to ensure that select groups of investors are not privy to firm-specific information before other investors. Executives are not allowed to reveal nonpublic information during their communications with analysts and select shareholders. If information is inadvertently released, they must take steps to broaden the dissemination of the information within 24 hours of discovering the disclosure. |
| Regulation G | Federal Reserve Boardregulation of lenders other than commercial banks, brokers, or dealers that provide credit for the purchase of or carrying of securities. This regulation was discontinued by a 1998 amendment. |
| Regulation M | Federal Reserve Boardregulation that currently requires member banks to holdreserves against theirnetborrowings 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 Boardregulation 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 Boardregulation that deals with grantingcredit to customers by securitiesbrokers, dealers, and exchange member as far as initial margin requirements and securities that are covered under the rules. |
| Regulation T Calls | Federal Reserve Board Regulation T margin calls are issued when a customer makes a transaction in a margin account and does not meet the minimum initial requirement of 50% cash or loan available. This margin call is referred to as a Fed Call. The customer must increase the equity in the account by depositing additional funds and/or marginable securities. If the necessary amount of cash or securities is not deposited into the account within the specified time period, securities may be sold to meet the call, and the account may become restricted. |
| Regulation U | Federal Reserve Board limit on how much credit a bank can allow a customer for the purchase and carrying of margin securities. |
| Regulations | Rules specifying the appropriate behavior of agencies, organizations or individuals in the securities industry. |
| 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 securitiesbrokers of the amount in customers' margin account as collateral for broker loans, which are used to cover margin loans to customers for marginpurchases 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 | Use of investment income to buy additional securities. Many mutual fund companies and investment services offer the automatic reinvestment of dividends and capital gainsdistributions as an optioninvestors. |
| Reinvestment date | The date on which an investment'sdividend or capital gains income is reinvested, if requested by the shareholder, to purchase additional shares. Also known as the ex-dividend date. |
| Reinvestment effect | The impact of a change in interest rates on the reinvestment rate. |
| 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 debtsecurity 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 financialsubsidiary 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 localcurrency. It can also be used as a netting center. |
| Reit | Real estate investment trust. Aimed at overseas investors it is a US listed tax transparent vehicle for US and some European funds. Specific rules apply as to how a Reit may distribute its income. |
| REIT | See: Real Estate Investment Trust |
| Rejection | Refusal by a bank to grant credit, usually because of the applicants 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 form of purchasing power parity | Theory that the rate of change in the prices of products should be somewhat similar, but not absolutely the same when measured in a common currency, as long as transportation costs and trade barriers are unchanged. |
| Relative PE | A firm or industry's price to earnings ratio divided by the market price to earnings ratio. |
| 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 strength index | Used in technical analysis, it is a measure of the number of days a stock increases in value relative to the number of days it decreases in value. The rule of thumb is that values over 70 suggest overvaluation and hence selling where as values around 30 suggest undervaluation or buying. Of course, this indicator completely ignores all fundamental information about the firm's prospects and, hence, is problematic to use as a stand-alone indicator for an investment strategy. |
| 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. |
| Reload Stock Option | A replacement stock option granted by some companies to optionees upon a stock swap. The number of reload shares granted is equal to the number of shares delivered to exercise the option plus, in some cases, any shares withheld for tax withholding obligations. The exercise price of the new option is the current market price. The option generally expires on the same date that the original option would have. |
| 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. |
| REMIC | See: Real Estate Mortgage Investment Conduit |
| 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. |
| Renegotiable rate | A type of variable rate involving a renewable short-term "balloon" note. The interest rate on the loan is generally fixed during the term of the note, but when the balloon comes due, the lender may refinance it at a higher rate. In order for the loan to be fully amortized, periodic refinancing may be necessary. |
| Renewable term life insurance | A policy for a stated period that may be renewed if desired at the end of the term. |
| Renewal | Placement of a day order identical to one not completed on the previous day. |
| Rent | Regular payments to an owner for the use of some leased property. |
| Rent assignment | An assignment of the rent payable for a property given by a landlord to a lender. Often a lender will take an assignment but not perfect it by service of notice to the tenant unless the borrower defaults. On service of notice all the rent payable is due to the lender. |
| Rent control | Municipal regulation restricting the amount of rent that a building owner can charge. |
| Rental guarantee | A covenant that a stated level of rent will be achieved, failing which the shortfall will be paid. Such covenants are usually found in forward funding situations where the funding institution wants the security of a minimum rental. |
| Rental lease | See: Full-service lease |
| Reoffering yield | In a purchase and sale, the yield to maturity at which an underwriteroffers 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. |
| Reopening | Treasuryofferings of additional amounts of outstandingissues, rather than an entirely new issue. A reopened issue will always have the same maturity date, CUSIP number, and interest rate as the original issue. |
| Reorg (or Corporate Action or Reorganization) | Any transaction involving the issuance of stock or cash, or the cancellation of stock tendered by a shareholder, such as in the case of a merger, acquisition or tender offer. |
| Reorganization | Creation of a plan to restructure a debtor's business and restore its financial health. |
| Reorganization bond | A bondissued by a company undergoing a reorganization process. |
| Repatriation | The return from abroad of the financialassets of an organization or individual. |
| Replacement Chain | A concept that views a capital investment as an indefinite commitment to a specific type of technology. The replacement chain concept can be used to allow the comparison of mutually exclusive investments with unequal lives. |
| Replacement cost | Cost to replace a firm'sassets. |
| 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'sassets. |
| 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. |
| Report of Condition and Income | Financial report that all banks, bank holding companies, savings, and loan associations, Edge Act and agreement corporations, and certain other types of organizations must file with a federal regulatory agency. Informally termed a callreport. |
| Report on title | A report based on investigation carried out on behalf of a lender or purchaser of property based on its own solicitor’s due diligence exercise confirming the extent to which the title is good and marketable. |
| Reported factor | The pool factor as reported by the bondbuyer for a given amortization period. |
| Reporting currency | The currency in which the parent firm prepares its own financial statements; that is, US dollars for a US company. |
| Representations | In the context of project financing, a series of statements about a project, a sponsor, or the obligations under the project contracts or the financing agreements. |
| Repricing | To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. |
| 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-termloan for which, where the collateral may be a Treasury security, money marketinstrument, 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'sshareholders that provides more preferential tax treatment for shareholders than dividends. Treasury stock is the name given to previously issuedstock that has been repurchased by the firm. A repurchase is achieved through either a Dutch auction, open market, purchase, or tender offer. |
| Required minimum distribution (RMD) | The minimum amount that the IRS requires must be withdrawn each year from all tax-advantaged retirement plans starting in the calendar year following the year in which the plan holder reaches age 70-1/2. Roth I |