Business Glossary: R

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R Fifth letter of a Nasdaq stock symbol specifying that the stock has rights.

RAM See: Reverse-annuity mortgage

RAP See: Regulatory accounting procedures

RE The two-character ISO 3166 country code for REUNION.

REIT See: Real Estate Investment Trust

REMIC See: Real Estate Mortgage Investment Conduit

RO The two-character ISO 3166 country code for ROMANIA.

ROA See: Return on assets

ROA See: Right of accumulation

ROCE See: Return on capital employed

ROE See: Return on equity

ROI See: Return on investment

ROL The ISO 4217 currency code for the Romanian Leu.

RPPP See: Relative purchasing power parity

RU The two-character ISO 3166 country code for RUSSIAN FEDERATION.

RUB The ISO 4217 currency code for the Russian Rouble.

RW The two-character ISO 3166 country code for RWANDA.

RWF The ISO 4217 currency code for the Rwanda Franc.

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.

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 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.

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.

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 appreciation/depreciation A change in the purchasing power of a currency.

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.

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.

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.

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 la