Alphabetical - R

RAFTRevolving Acceptance Facility by Tender
Rainbow OptionAn option whose payoff is dependent on two or more underlying variables.
Range-Forward ContractThe combination of a long call and short put or the combination of a short call and long put.
Rating AgencySuch as Moodys, Standard & Poors and Fitch which rate the default risk on corporate and soverign debt.
Real Interest RateThe return on an investment once the effect of inflation is taken into account.
RebalancingThe process of adjusting a trading position periodically. Usually the purpose is to maintain delta neutral.
RedeemBuy back or pay off.
RedeemableApplied to a preference share or bond - may be redeemed by the issuer on terms stated at outset.
Redemption??
Redemption Date??
Redemption Yield??
Registered??
Repayment MortgageMortgage on which capital and interest are gradually repaid.
Repo??
Repo RateThe rate of interest in a repo transation.
Repurchase AgreementSelling securities and agreeing to buy then back at a slightly higher price.
Reset DateThe date in a swap or cap or floor when the floating rate for the next period is set.
Residual Risk??
Retained EarningsPast profits which the company has not distributed to shareholders.
Reversion LevelThe level that the value of a market variable (e.g. an interest rate) tends to revert.
Revolver BondA Revolver Bond is a variant of a regular Bond or other debt security.
Revolving CreditA commitment to lend on a recurring basis on pre-defined terms
RhoRate of change of the price of a derivative with the interest rate.
Rights IssueAn offer of shares for cash to existing shareholders in proportion to their existing holdings (e.g. 2 for 1). An issue to existing shareholders of a security giving them the right to buy new shares at a certain price.
RiskGovernment transactions are regarded as the safest and therefore have the lowest rates of interest
Risk Free RateThe rate of interest that can be earned without assuming any risk.
Risk Management??
Risk Neutral ValuationThe valuation of an option or other derivative assuming the world is risk neutral. Risk-neutral valuation gives the correct price for a derivtaive in all worlds, not just in the risk-neutral world.
Risk Neutral WorldA world where investors are assumed to require no extra return on average for bearing risks.
Risk PremiumThe expected rate of return above the risk free interest rate.
Risk Weighted AssetsRWA is the aggregate measure of different risk factors affecting the evaluation of financial products.
Roll Backsee Backwards induction
Rolling OverRenewal of a bank loan with alteration of interest rate as per the agreed formula, for example LIBOR + 1%
Rolling SettlementFor example '5 working days' that is the deal on Tuesday, settle next Tuesday, deal Wednesday, settle next Wednesday, instead of all deals within a given 'account' being settled on a given day
RolloverIn exchange traded derivatives, rolling a position from one expiry or delivery month to the next.
RORACReturn On Risk Adjusted Capital
RUFRevolving Underwriting Facility
Running YieldFlat Yield
RAFT
Revolving Acceptance Facility by Tender
Rainbow Option
An option whose payoff is dependent on two or more underlying variables.
Range-Forward Contract
The combination of a long call and short put or the combination of a short call and long put.
Rating Agency
Such as Moodys, Standard & Poors and Fitch which rate the default risk on corporate and soverign debt.
Real Interest Rate
The return on an investment once the effect of inflation is taken into account.
Rebalancing
The process of adjusting a trading position periodically. Usually the purpose is to maintain delta neutral.
Redeem
Buy back or pay off.
Redeemable
Applied to a preference share or bond - may be redeemed by the issuer on terms stated at outset.
Redemption
??
Redemption Date
??
Redemption Yield
??
Registered
??
Repayment Mortgage
Mortgage on which capital and interest are gradually repaid.
Repo
??
Repo Rate
The rate of interest in a repo transation.
Repurchase Agreement
Selling securities and agreeing to buy then back at a slightly higher price.
Reset Date
The date in a swap or cap or floor when the floating rate for the next period is set.
Residual Risk
??
Retained Earnings
Past profits which the company has not distributed to shareholders.
Reversion Level
The level that the value of a market variable (e.g. an interest rate) tends to revert.
Revolver Bond
A Revolver Bond is a variant of a regular Bond or other debt security.
Revolving Credit
A commitment to lend on a recurring basis on pre-defined terms
Rho
Rate of change of the price of a derivative with the interest rate.
Rights Issue
An offer of shares for cash to existing shareholders in proportion to their existing holdings (e.g. 2 for 1). An issue to existing shareholders of a security giving them the right to buy new shares at a certain price.
Risk
Government transactions are regarded as the safest and therefore have the lowest rates of interest
Risk Free Rate
The rate of interest that can be earned without assuming any risk.
Risk Management
??
Risk Neutral Valuation
The valuation of an option or other derivative assuming the world is risk neutral. Risk-neutral valuation gives the correct price for a derivtaive in all worlds, not just in the risk-neutral world.
Risk Neutral World
A world where investors are assumed to require no extra return on average for bearing risks.
Risk Premium
The expected rate of return above the risk free interest rate.
Risk Weighted Assets
RWA is the aggregate measure of different risk factors affecting the evaluation of financial products.
Roll Back
see Backwards induction
Rolling Over
Renewal of a bank loan with alteration of interest rate as per the agreed formula, for example LIBOR + 1%
Rolling Settlement
For example '5 working days' that is the deal on Tuesday, settle next Tuesday, deal Wednesday, settle next Wednesday, instead of all deals within a given 'account' being settled on a given day
Rollover
In exchange traded derivatives, rolling a position from one expiry or delivery month to the next.
RORAC
Return On Risk Adjusted Capital
RUF
Revolving Underwriting Facility
Running Yield
Flat Yield

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