R Flashcards
Rapid growth stage
See Expansion stage
Rating category
A statement about the expected return on a
stock relative to all other stocks in an equity
analyst’s coverage universe. See also
Coverage universe and Equity analyst
Ratio analysis
The analysis of liquidity, risk analysis,
operating performance, and value ratios to
help forecast company performance. See
also Liquidity ratio, Risk analysis ratio,
Operating performance ratio, and
Value ratio.
Rational expectations
Investors have rational expectations if they
all gather and act on information in an
efficient and unbiased way. See also Biased
expectations and Traditional finance
Real body
A box used in candlestick charts that
visually represents the difference between
each period’s opening and closing price. See
also Candlestick chart.
Real estate
Refers to land and/or any of the fixed assets
(residences, buildings, and factories) built
upon it
Real Estate Investment Trust
REIT
An income trust that invests in and
manages a diversified portfolio of real estate
assets.
Realized capital gain
The profit earned on a security when it is
sold for more than what was paid for it. See
also Net realized capital gains and
Unrealized capital gains
Real-return bond
A debt security with coupon payments and
principal indexed to inflation. See also
Index ratio and Inflation compensation
Re-balancing
Returning a portfolio back to its strategic
asset allocation. See also Temporal
re-balancing and Re-balancing by
weights.
Re-balancing by weights
Re-balancing a portfolio in response to
fluctuations in the value of each asset class.
See also Re-balancing
Recommended list
A list of best stock picks issued by an
investment dealer or other provider of
equity research.
Record date
The date on which a shareholder must own
a company’s shares to be entitled to a
declared dividend. See also Dividend and
Ex-dividend date.
Redeemable bond
A debt security that gives the holder the
right to request repayment of principal
from the issuer before maturity. Also known
as a putable bond.
Registered account
An account for which contributions are
tax-deductible and/or the tax on investment
returns is deferred to a later date. See also
Registered Retirement Savings Plans
(RRSPs), Registered Retirement Income
Funds (RRIFs), and Registered
Educational Savings Plans (RESPs).
Registered Education Savings Plan
RESP
A government-sponsored account used to
finance a child’s post-secondary education.
The tax on investment returns earned
within the account is deferred until money
is withdrawn. See also Registered account.
Registered Retirement Income
Fund (RRIF)
A government-sponsored account used to fund an individual’s retirement. The tax on investment returns earned within the account is deferred until money is withdrawn. A minimum amount of money must be withdrawn from the account each year during retirement. See also Registered account.
Registered Retirement Savings
Plan (RRSP)
A government-sponsored account used to
save for an individual’s retirement.
Contributions (up to a certain amount) are
tax deductible and the tax on investment
returns earned within the account is
deferred until money is withdrawn. See also
Registered account.
Regret
A qualitative notion of risk in which an
investor dwells upon past mistakes, leading
to increased timidness regarding future
investment decisions.
Regular dividend
A dividend shareholders may expect to
receive on an ongoing basis. See also
Dividend, Extra dividend, and Stock
dividend.
Regulatory requirements
Any regulatory issues that limit or restrict
the way a portfolio is managed. See also
Legal requirements.
Relative Strength Index (RSI)
An oscillator that measures the strength of
price gains on days that a stock closes up
versus the strength of price declines on
days that a stock closes down. See also
Oscillator.
Relative valuation model
A valuation model that determines intrinsic
value by comparing one or more of the
stock’s value ratios or price multiples (such
as price- earnings, price-to-book, or
price-to-sales ratios) to a benchmark value
for the price multiple.
Relative value hedge fund
A hedge fund that attempts to profit by exploiting inefficiencies or arbitrage opportunities in the pricing of related stocks, bonds, or derivatives. Relative value hedge funds generally have low or no exposure to the underlying market direction. See also Hedge fund.
Relative Wealth Measure (RWM)
The RWM measures the amount per
$1,000 of assets that needs to be invested at
the pre-tax return to pay the tax liability.
Research analyst
See Equity analyst.
Residual
A debt security representing a fixed-coupon
bond’s principal that has been stripped
from the coupon payments. See Strip
coupon.
Resistance level
The price point(s) at which investors
believe a stock is fully valued or possibly
even overvalued. At this point, perceived
return potential is limited, and many
holders of the stock (or short sellers) are
willing to sell. Because of the limited return
potential, potential buyers are unwilling to
buy. Prices tend to fall as supply
overwhelms demand. See also Horizontal
support, Horizontal resistance, and
Support level.
Restricted voting common shares
Common shares that limit the number of percentage of votes given to shareholders, or which limit the matters on which shareholders can vote. See also Common shares, Multiple voting common shares, Non-voting common shares, and Subordinated voting common shares.
Return objective
A measure of how much the client’s
portfolio is expected to earn each year on
average.
Return of Capital
Trust or fund distributions in excess of the
taxable income investors should receive
Return On Equity (ROE)
Profit divided by common equity. ROE
can also be calculated as the product of a
company’s net profit margin, total asset
turnover, and financial leverage. See also
Net profit margin, Total asset turnover,
and Financial leverage.
Reversal formation
A chart pattern that helps confirm if a trend
reversal has taken place. See Trend reversal.
Riding the yield curve
An active fixed income strategy that
involves buying a bond with a maturity
much longer than the investor’s time
horizon. If the yield curve is upward sloping
and its shape and level are expected to
remain unchanged, the bond will increase
in price with time.
Risk analysis ratio
A ratio used to determine how well a
company deals with its debt obligations
Risk arbitrage hedge fund
See Merger arbitrage hedge fund.
Risk aversion
Investors are risk-averse if, given the choice
between investments with identical
expected returns, they invest in the one
with the least amount of risk. See also Risk
seeking and Traditional finance.
Risk objective
Defines the amount of risk the client can
tolerate to meet the return objective. A
client’s risk objective is a function of their
risk tolerance, which in turn depends on
their willingness and ability to bear risk in
their portfolio. See also Return objective
and Risk tolerance.
Risk premium
A measure of the expected return on an asset class minus the expected return on another asset class.
Risk seeking
Investors are risk-seeking if, given the
choice between investments with identical
expected returns, they invest in the one
with the greatest amount of risk.
Risk-seeking behaviour by investors in
certain situations is a key tenet of
behavioural finance. See also Risk aversion
and Behavioural finance.
Risk tolerance
A specific statement of how much risk the
client can sustain to meet the return
objective. Risk tolerance depends on the
client’s willingness and ability to bear risk.
Risk-adjusted return measures
A measure of return that takes into account
the level of risk taken to earn the return.
Also, the returns generated by a fund
compared to the level of risk taken to earn
those returns. Because Risk-adjusted return
measures incorporate both the risk and
return of a fund, they can be used to
compare funds with different investment
mandates. See also Sharpe ratio and
Alpha.
Roll yield risk
The risk of loss in a futures contract-based
ETF on the price convergence between the
commodity futures contract and the
commodity’s spot price.
