eFinancialCareers

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.

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, 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. For a simple random walk, the best forecast of tomorrow's price is today's price. Related: Mean reversion.

Random walk with drift
For a random walk with drift, the best forecast of tomorrow's price is today's price plus a drift term. One could think of the drift as measuring a trend in the price (perhaps reflecting long-term inflation). Given the drift is usually assumed to be constant. Related: Mean reversion.

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.

RAP
See: Regulatory accounting procedures

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 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 funding fixed-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's debt issue 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 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 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 financial investment.

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 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 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 brokers market.

Real option
An option or option-like feature embedded in a real investment opportunity.

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 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.

Realistic on price
In trading, and indication that the size under consideration requires price give, especially with illiquid stocks. See: Takes price.

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 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 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.

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
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.

Recession
A temporary downturn in economic activity, usually indicated by two consecutive quarters of a falling GDP.

Recharacterization
The reversal of a traditional IRA contribution 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.

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's books 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 herring
A preliminary prospectus providing information required by the SEC. It excludes the offering price and the coupon of the new issue.

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.

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 date
The date on which a bond matures 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 discount short-term negotiable debt instruments for a second time, after they have been discounted with a bank.

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 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 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 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 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-sheltered retirement 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 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 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
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 prospectus delivery requirements. Second, it refers to a 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 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 Board regulation 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 Board regulation that currently requires member banks to hold reserves against theirnet 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 grantingcredit to customers by securities brokers, 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