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Investing Glossary - R

    Rabbi Trust

    Rabbi Trust This type of trust was originally developed for a rabbi and is set up for employees of a company as a compensation plan. This trust fund is highly regulated to prevent employers from having any access to the money once it is placed into the fund, although the money can be forfeited if all of the strict guidelines are not met. There is always a risk of forfeiture, so the employer must be very careful to have a rabbi trust fund managed very carefully, which can be difficult since the employer is not able to access any of...

    Ramp Up

    Ramp Up – This is a business and economics term. It combines firm production expectations and new, expected orders, increases in product demand. When this supply and demand dictates and increases, or the market signals some indication, that an up-scaling, increase or rise, trending upward, escalating, would be required to meet those needs, anticipatory steps need to be taken to step it up a notch or two. Operations output increases become the order of the day, especially if the demand if higher or more, bigger orders come in. Breaking through that production possibility frontier and delivery, exceeding expectations becomes the...

    Rating Service

    Rating Service This occurs when a company of any sort decided to publish any ratings that it might have on preferred stock or debt issues for any securities that it has dealt with. This rating keeps things like the possibility of any payments being late and how consistent these payments are. The company can gather this data by looking at a variety of different sheets and the end result of this rating service can greatly impact the borrowing costs for securities. This is particularly true when the rating comes from a powerful and influential company, as all who are involved...

    Real Estate Investment Trust

    Real Estate Investment Trust - A Real Estate Investment Trust, more commonly referred to as ?REIT? are a different type of real estate investment. This particular type of investment does not include individual homes or small estates. This was set up and, secured for the larger properties such as the office buildings, hotels, shopping centers. There are three variable types of trusts that all fall under the same category as set up by government laws. The three variables are Equity, Mortgage and, Hybrid. Criteria have been set up and, must be conformed to or a company will be disqualified and,...

    Realized Gain

    Definition: The gain that occurs when you sell an investment for more than you paid for it. TeenAnalyst Advice: When an investor has a realized gain on their investment, they have to pay a capital gains tax.  This capital gains tax is usually taxed at their income tax bracket level, unless the investment was held for at least a year.  If so, it's taxed at a lower rate.   ...

    Recapitalization

    Recapitalization - A company or financial institution that is experiencing financial distress will utilize this method of exchange to delete from the records certain financial debt. In doing they could receive a lower rate of interest in order to accommodate them through their financial difficulty and, gain a long maturity for the common stock they possess. This particular method can also be utilized as an alternative exit strategy for venture capitalists. As a last resort it can be a tool used wise to fend off a hostile takeover. These few steps will aid a corporation to restructure their business leading...

    Recession

    Definition:  A period in which the economy is in an overall decline.  The technical definition is at least 2 quarters of negative growth in GDP. TeenAnalyst Advice: Recessions are never fun to go through.  These are periods of rising unemployment and falling stock prices.  However, they're part of normal business cycles and the economy always comes out of them.The government can take steps to improve the economy by lowering interest rates, which makes people want to spend more.   ...

    Reconstruction

    Reconstruction - Reconstruction is a method of utilizing corporate investment funds. This is a method used by small, medium enterprises known as SME's. One of the characteristics of these funds is they have been set up as part of the local institutions. An in depth report of the current financial status is mandatory before any of this can go through. A requirement is that the actual level of investment made by such funds must remain at a relatively low level. Based on these observations by an astute personnel officer the local financial institution initiatives in dealing with heavily indebted companies...

    Record Date

    Record Date - The record date is a time set aside for when corporate records are closed to establish the owner of record in regards to stocks which takes approximately five-business days for securities and, one business day for the mutual funds. The records must prove who contained ownership in a stock or, stocks in order for legal, tender payment rendered soundly. The general rule of thumb is that the record date is the last day of the month but for dividend purposes a participant must have owned shares of stock upon a decided previous date, also referred to as...

    Redeemable Shares

    Redeemable Shares - Redeemable Shares are shares of stock security issued early on yet your corporation has the unalienable right to retrieve it or buy back. These particular issued shares of stock are one where a dollar value is paid back to the individual at some future date to be arranged. On average when an individual purchases any number of stock shares they do not expect to retrieve the amount of money that was assigned to them paid back in full. Most naturally expect to earn a profit over time. Unfortunately this is an issue that each person needs to...

    Redemption Fee

    Redemption Fee This is meant to discourage mutual fund timing by charging investors a stiff fee every time an investment is sold before a predetermined amount of time. This makes it somewhat costly to sell an investment prematurely, which means that most investors will only do it when they feel it is absolutely necessary. This fee is usually only applicable for up to one year after the investment has been made, but exceptions are possible. This is meant to help long term investors as well, since short term investors generally have a negative impact on the overall market, even when...

    Redemption Price

    Redemption Price - The redemption price of an issued stock, preferred stock or, bond known as the redemption value. This means that when you first divested and, purchased a preferred stock, well informed at the time of purchase what the specified price was. The set price of the stock for sale that is non-negotiable. This is the destination point when an open-end investment company will try to offer to buy back the stock. The owner had control of the issued stock on or, before maturity. The price the issuer must pay, if they wish to redeem these stocks or, retire...

    Regional Fund

    Regional Fund When a mutual fund invest in one particular region, it is called a regional fund. There are many different regions that the world can be broken down to, as you can invest in a particular part of a country or on a particular continent. What this type of fund does is allow for investors to diversify their portfolio enough, even if they do not have the money to invest in many different areas of the region. The end result is that a regional fund is perfect for the novice investor who is trying to learn the ropes and...

    Registered Security

    Registered Security This term actually has two different definitions, although both of these definitions are somewhat interrelated. Firstly, it is what a security is called when its ownership becomes registered with the company or agent that has issued it. This is how securities are often handled, as it gives the issuer enough information to property manage things like dividends and notices to the investor. Secondly, it is a security that is not available to be sold because there have been restrictions placed on it when it was originally issued. In these cases, certain regulations must be met in order for...

    Registration Right

    Registration Right - Registration right is what permits all and, any investors to persuade a given corporation to register its shares of common stock issuable upon the exchange of all preferred stock with the Security and Exchange Commission. Under Rule one hundred forty four it requires certain public information about the said company to be available and, limits on the number of shares offered for sale. Registration with the Security and Exchange Commission can be both costly and, time consuming so patience is required. Registration rights are on average rarely used and, have little practical or useful purpose or effect...

    Regular-Way Delivery

    Regular-Way Delivery This is the standard delivery for securities and has to take place by the third business day following the transaction. If a bond is involved in the transaction, it must occur on the first business day following the transaction. What this transactions entails is for the securities to be delivered from the seller to the buyer and the payment to be delivered from the buyer to the seller within this timeframe. It is possible to make special specifications that will allow for other timelines of delivery, but this is the standard way that securities are meant to be...

    Regulation FD

    Regulation FD - Regulation FD (Fair Disclosure) is the revelation through publicly traded corporations with information passed on. When the holder of the stock certificates gives out private or non-public information to certain individuals he or she must them divulge this same information publicly. This is a general reference to stock analysts, and, securities market professionals that may have a biased interest. In a sense it means that any information shared within a close knit group must then be turned over into the public domain. All the pertinent information that has become public can in no way misconstrue good faith...

    Regulation S

    Regulation S - Regulation S is the offer and, sale of stock beyond the borders of the United States without the necessity of registering the stock. An individual conducting the attempt to make an offer on a given stock or the sale of securities may claim the availability of exemption from following the usual registration requirements. The safe harbor is to offer and sell that which occurs outside the restrictions and, confines of the United States border. Nothing in these rules precludes access for publications with a general circulation in the United States to offshore press conferences and meetings with...

    Reinvestment Date

    Reinvestment Date - The Reinvestment Date was a creation of business to allow all pending transactions, past and, present to be in complete form preceding the date of closing. If a person purchasing a stock investment does not manage to close the deal before an agreed upon date the dividends at the end of the current cycle with then revert back to the original seller. The payment price of the stock in question will also revert back to the previous quarter for dividend payment. This means the new owner will not be entitled to dividend payments until the next cycle...

    Reinvestment Privilege

    Reinvestment Privilege In some cases, a mutual fund will gives its investors the chance to purchase additional shares of the fund without having to pay the sales charge that normally goes along with it. The purpose of this is to help convince people who have made some money from their investments to put it back into the mutual fund to help it grow even further. Both income and capital gains can be used for this reinvestment and the lack of a sales charge is to encourage this additional investment, as this is the best thing for the mutual fund as...

    Real Estate Investment Trust (REIT)

    Definition: A security that trades as a stock on the stock exchange, but invests in real estate and/or mortgages. TeenAnalyst Advice: REIT's are special trusts that receive tax advantages from the government.  They're obligated to pay out 90% or more of their earnings to investors in the form of dividends so it's not unusual to see a REIT with a 10-12% dividend.An equity REIT invests in and owns various real estate properties.  Their revenues come from people renting places in those buildings.A mortgage REIT invests in mortgages on real estate.  Their revenues come from the interest paid on the mortgages.   ...

    Relative Value

    Relative Value - Relative Value is a unique measurement tool used by many in the investment word to weigh the value of one investment stock to another. Many are compared by the use of bundling to establish a self worth over a short period of time against another stock of equal exchange. The context of the question, however, may lead to a preferable measure and, that measure may not be the Consumer Price Index (CPI), which used too often without thought to its consequences. It is basically making an educated guess as to speculating the cost over a given amount...

    Residual Security

    Residual Security - Residual Security is both an interesting and, very effective tool used by many investors and, businessmen in the business industry for diluting the earnings per share on initial stock issued. This is a common practice within the business community in order to increase the number of shares of outstanding common stocks held. This in turn will generate a source of income for the business in question through the eventual sale and, trading of this individual common stock into the public realm. Most often this practice used in the conversion of convertible bonds also referred to as a...

    Resource Allocation

    Resource Allocation – Understanding the very mechanics at work for investment , to prepare better for future positioning and success, as well as higher profits and growth tomorrow,  how to get there and get that done with what the business has on hand and in reserve, for the best results. Part of resource management efforts, RA, has to do with the actually planning, management and operations investment strategies essentials. The staff, means, monies and resource allocation, supply sourcing, reserves, sharing, portion part-allotment, distribution and provision or sorts, of capital, portfolio distribution and make-up makes the most of all available resources...

    Restricted Security

    Restricted Security This type of security are transferred in a private sale that has not been registered and, therefore, they are not able to be resold in public unless some sort of exemption is found. Since these securities are difficult to transfer once they have been purchased, buyers must be sure that this is the security that they want beforehand. Also, a great deal of research is required in order for the buyer to find a way around the registration requirements that are needed for a resale to take place. One way to remove this restriction is to contact the...

    Restricted Stocks

    Restricted Stocks - Restricted Stocks fall under the jurisdiction, laws and, rules of the Security and Exchange Commission. These are any given stock being or attempting to be traded on the Stock Exchange during normal business trading hours. It is the involvement of the purchasing of a given stock and, then at the same times the sale of it. The reason being is that many corporations are now issuing stocks to the employees as a reward system in lieu of all and, any cash payments. In effect, a short term way to skirt the laws, rules and, regulations of the...

    Return On Assets

    Return on Assets - Return on Assets is a valuable tool of measurement over a twelve-month period utilized by the many investors. Usually this will be included as part of your annual portfolio that you will be provided from your broker of choice. It is the tracking of value growth of a particular stock until the end of the year. The value growth divided by the twelve-month cycle of any given year will give you the return value for that particular stock looking for. The results do not always show in the denominational value but, show as an overall percentage...

    Return on Capital

    Return on Capital - Return on Capital is just what it implies, the return you benefit from through the practice of investing cash capital. It is a general practice used by many corporations that participate in that corporation's activities to generate a cash flow through investment practices and, tax sheltering. Just as stock gain and, lose value on any given day, the same applies to cash flow investments. As the capital invested increases in value over the initial amount invested the company is in better standing. When the capital invested decreased in value of the initial amount invested that same...

    Return On Equity

    Return on Equity - Return on Equity is a measurement used to rate the return on the ownership interest on common stock generally held by individuals, not by a corporation. A tool used to measure a firm's efficiency of generating profits from every dollar invested of net assets. Some industries have a high return on equity because they do not have a need for assets. Other companies are high capital investment companies which limits their competition. When general corporate earnings are not reinvested the return on equity becomes irrelevant. The growth rate will be lower if the earnings used are...

    Return On Invested Capital

    Return on Invested Capital - Return on Invested Capital is a non-financial measure that sets the general rule of thumb to help a company or corporation to see the progress or, lack of progress in their capital investment. The innate ability to generate a consistent cash flow coincides with the movement and, constant flow in the relation to the cash capital initially invested in the business. It is the net operating profit generated, minus the adjusted taxes and, then divided by the initial invested capital which includes monetary capital, financial debt and, shareholders' equity. This will give you total capital...

    Return on Sales

    Return on Sales - Return on Sales shows how the efficiency of management use of sales income will benefit the daily operation. It is any given company given percentage of profit and, loss which can be calculated quarterly or, or annually. It also indicates a firm's ability to withstand adverse conditions. These conditions are falling prices, declining sales or, rising costs. This does affect a corporation business during prices wars in various ways. The higher the figure, the better the company can withstand the pressure. To have a successful operation the company must have the ability to read, understand and...

    Return on Total Assets

    Return on Total Assets - Return on Total Assets derived through deducting the taxes accumulated and, accessing the total assets of the company worth to arrive at the sum total of the publicly traded earnings of that said company. It is a mathematical equation expressed as a percentage of the company overall worth. Reading, analyzing these types of pie-charts will show the business as an entity is performing in comparison to other business that are in competition. A return reading high is a good indication that the investments made by the company are going well. A return reading low...

    Revenue

    Definition: The amount of sales in a given period, including discounts and returns.  Commonly referred to as the "top line." TeenAnalyst Advice: As an investor, we usually look for companies that are growing their businesses.  One way to determine this is by looking at the company's revenue growth.  Strong year-over-year revenue growth ...

    Reverse Acquisition

    Reverse Acquisition - Reverse Acquisition is a private company purchasing or, requisitioning a publicly traded company and, works to change, rearrange its staff to accommodate the change. This is a method practiced frequently to permit a privately run company to evolve into a publicly traded company, avoiding all the financial requirements required. This occurs when the publicly traded company is a shell and, operates under very little activity. The benefits noted presumably offer the latter of the two companies more liquidity to operate the newly formed business. Trading factors at this point in time become less dependent upon market conditions...

    Reverse Hedge

    Reverse Hedge - Reverse Hedge is a commonly used practice by the savvy stock investors selling stock short when they own a common stock. Financial investors have named it a Chinese hedge for many reasons. The stock security investor will buy and, then sell a convertible stock security short. The underlying stock security held. The stock investor will make a profit based upon the underlying stock security losing value at a rapid rate. This will instinctively cause the stock security investor to profit as a result. This is a defined arena but, the Security and Exchange Commission still has rules,...

    Reverse Stock Split

    Definition:  A reverse stock split is a reduction in the corporation's total number of shares available and an increase in the stock price. TeenAnalyst Advice: A reverse split usually occurs for one of two reasons?1.) Most mutual funds won't invest in a stock below $5/share.  Some companies will reverse split their stock to try to get it above that level so mutual funds will invest in it.2.) Stocks must remain above certain price levels to stay listed on a stock exchange.  Companies might do this to stay listed.A 1:2 reverse split means "1 new share for every 2 current shares."  So...

    Reverse Take-Over

    Reverse Take-Over - Reverse Take-Over is the practice of one company or, corporation buying out a larger company or corporation. The company or, corporation bought out can be a private company or a public company. The purchasing of a public corporation or, company does not stop the stock security from trading on the Stock Exchange. A privately owned company now has the advantage of gaining a listing on the Stock Exchange. It will put its own management team in place and, rename the public corporation. Reverse Take-Over is a rare practice but it has occurred in the past and, is...

    Rights Issue

    Rights Issue - Rights Issue is the permission of a company or corporation to existing shareholders. The current shareholders status give them access to purchase shares of stock security of an issue of the common stock before the company offers the stock securities to the public domain. The stock security then offered at a discounted price to the current shareholders making the offer a worthwhile buy for the shareholder. When the stock security offered presented to the public the price will be for a higher yield to the company holder. Issuing rights only comes from the management staff through the...

    Risk-Free Asset

    Risk-Free Asset - Risk-Free Asset is a secured asset that has a low rate of return. There is no guesswork with this investment. Risk-free assets are prone to inflation risk. The return of security is confidence in advance and with certainty. The assurance comes from the confidence of the issuer of the asset. Treasury security considered risk free because, the government is a stable issuer. Risk-free assets have a very low level of risk. The jeopardy of inflation is another consideration. As a purchaser know your rights and, the laws governing the stock option. Diversify your portfolio with other options...

    Risk Arbitrage

    Definition: The simultaneous purchase of stock in an acquired company and the sale of stock in a purchasing company. TeenAnalyst Advice: Usually when a company purchases another company, they see their stock decline slightly.  The company being acquired is purchased at a premium, so their stock usually appreciates.  Risk arbitrageurs ...

    Risk Free Rate

    Definition: The risk-free rate of return is a theoretical rate of return on an investment with no risk.Advice: The risk-free return is usually considered to be the return offered on treasury bills.  The reason for this is because the government is considered to be the most creditworthy borrower and you are absolutely guaranteed to get your principal back when you invest in these.Historically, the risk-free rate has been around 3.5-4.5% and is influenced by interest rate movements.  ...

    Riskless Asset

    Riskless Asset - Riskless Asset is very similar to risk-free asset. An individual can either choose a riskless asset which is to lend or, take the short-term position which is to borrow. The low interest rate is identical in both cases. To know the future return of an asset with absolute certainty is valuable to the investor. The strategy short positions require an additional capital pledge over time to cover any shortfalls. A higher rate of return will offset or, balance any shortfall in the future of the stock investment. It is subject to inflation risk but the risks are...

    Riskless Rate of Return

    Riskless Rate of Return - Riskless Rate of Return based in part, on the Riskless Asset and, rate of return to lend and, borrow. The three-month Treasury bill related to this riskless rate of return is virtually risk free. The profit and sale of an identical purchase regarded as riskless rate of return. It is a theoretical interest rate with positive returned on a future investment with a guaranteed return. Add to your portfolio the stabilization to keep your assets in a volatile market. Business investors have a positive way to keep control of company assets. Interest free...

    Risk Margin

    Risk Margin - Risk Margin is the potential movement of stock securities with regard to the potential of the option position. The potential for up and down differential movement with the stock market vary greatly from day to day. Stock movement is tracked daily and, quarterly for overall success or, failure of the value of the stock. Measures of variability utilized to understand the frequent deviations within the stock market. If a business borrows it is imperative to pay back in full immediately. This is a useful tool to utilize and, the associated risks recognized. Determine what you need and,...

    Return on Investment (ROI)

    Definition:  A profit or loss from an investment.  This can refer to individuals or companies. TeenAnalyst Advice: An individual's return on investment is easy to calculate.  If you bought a stock for $20 and sold it for $30, you would have a 50% return on your investment.  ...

    Roth IRA

    Definition: An individual retirement account (IRA) that has special tax advantages.  The investor pays taxes upfront and it then grows tax free after that. TeenAnalyst Advice: A Roth IRA has many tax advantages for people who are thinking about retirement.  The investor pays taxes up front and then the ...

    R Share

    R Share This is a type of mutual fund that it related to various retirement accounts. This means that money that is placed into this type of mutual fund is to be saved for retirement. Because of this, there is no a front-end load or a back-end load being charged, but a certain percentage is charged every year. These are low risk funds that cannot be cashed for quite some time, so a percentage of the fund's value every year makes sense for the investor. That prevents retirees from having to pay all of their fees at once, which makes...

    Rule 12b-1 Fee

    Rule 12b-1 Fee This is a fee that has been charged by a mutual fund to cover various miscellaneous expenses that occur over time. In some cases, this fee is used to cover promotion or marketing of the fund, while it can also be used for distribution costs and as commission to give to managers. There are types of funds that do not have a rule 12b-1 fee but in these cases, there will be other hidden fees or higher commissions in order to cover these expenses. The fee must be stated up front and it is usually less than...

    Rule of 72

    Definition: A rule that allows investors to calculate how long it'll take their money to double by dividing 72 by their expected return. TeenAnalyst Advice: For example, if you are expecting a 10% annual return on your investment, you would divide 72 by 10 to get 7.2.  It would take 7.2 years for your money to...

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    Definition of the Day Backgrounder

    Backgrounder - a backgrounder is a document which contains the history of company, or a specific product...  The information in the backgrounder contain financial information, lists key personnel, goods and service information, a mission statement , and the company’s objectives The backgrounder is usually brief, and is a basic summary...

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