sohomghosh/FinRAD_Financial_Readability_Assessment_Dataset

terms stringlengths 1 156	definitions stringlengths 3 4.2k	source stringclasses 15 values	flesch_reading_ease float64 -301.79 121	flesch_kincaid_grade float64 -3.5 55.6	smog_index float64 0 26.5	coleman_liau_index float64 -33.81 51.4	automated_readability_index float64 -6.9 65	dale_chall_readability_score float64 0.1 35.3	linsear_write_formula float64 -0.5 73	gunning_fog float64 0.4 56
PUNTER	A SPECULATOR.	palgrave	-6.7	14.7	0	1.3	7.8	11.63	1	20.8
PUP COMPANY	The subsidiary of an INSURER that writes SPECIAL RISK INSURANCE on behalf of the parent company or other group companies.ACCOUNTING.	palgrave	34.26	13.5	0	14.91	15.2	11.73	14	16
PURCHASED GOODWILL	Any form of GOODWILL that a company obtains through the ACQUISITION of another company or business.	palgrave	38.32	11.9	0	12.53	11.3	7.39	12	8.9
PURE ARBITRAGE	(1) Any ARBITRAGE strategy that makes use of external, or borrowed, funds rather than internal funds. (2) Any arbitrage strategy that is executed in a truly riskless manner, by simultaneously buying and selling the same ASSET in different MARKETS to take advantage of a price discrepancy. (1,2) See also QUASI ARBITRAGE.	palgrave	11.25	24.4	0	12.84	29	12.36	37.5	26.67
PURE BOND VALUE	See INVESTMENT VALUE.	palgrave	34.59	9.2	0	9.23	9.9	9.05	1.5	14.53
PURE CATASTROPHE SWAP	An OVER-THE-COUNTER SWAP trans- action that allows INSURERS or REINSURERS to exchange uncorrelated CATASTROPHIC HAZARDS in their PORTFOLIOS in order to improve DIVERSIFICATION. See also CATASTROPHE REINSURANCE SWAP.	palgrave	14.97	14.7	0	20.06	17.2	11.66	11.5	17.03
PURE PLAY	A company that is very focused in its business operations and has little or no DIVERSIFICATION in other areas. This often makes it sim- pler for INVESTORS to discern the RISKS and RETURNS that can be obtained from investing in such a company’s STOCK.	palgrave	57.61	10.7	0	9.63	11.7	9.75	13.5	12.44
PURE PREMIUM	The amount an INSURER needs to charge to cover EXPECTED LOSSES and LOSS ADJUSTMENT EXPENSES; pure premium is one of two components, along with PREMIUM LOADING, used to determine FAIR PREMIUM. See also EXPENSE LOADING.	palgrave	45.25	11.3	0	11.95	12	9.47	13.25	15
PURE PREMIUM RATING METHOD	A method of determining the PREMIUM on PROPERTY AND CASUALTY INSURANCE that excludes PREMIUM LOADING factors, generally computed as:where Loss is the amount of losses per year, LAE is the LOSS ADJUSTMENT EXPENSE per year, and U is the number of exposure units (e.g., policies).	palgrave	17.34	22	0	12.38	25.5	13.59	32.5	26
PURE RISK	A RISK exposure that can result only in a loss or no loss, but no possibility of a gain. Also known as STANDARD RISK. See also SPECULATIVE RISK.	palgrave	70.5	5.7	8.8	4.38	2.9	7.48	4.666667	8.01
PURPOSE LOAN	A LOAN, collateralized by SECURITIES and subject to MARGIN rules, where the proceeds are used to purchase other securities. Also known as MARGIN LOAN. See also NON.	palgrave	53.88	8	8.8	9.54	7.1	8.18	4.5	6.56
PUT	See OPTION.where c is the price of the call option, X is the strike price, p is the price of the put option, S is the underlying STOCK (or asset) price, rf is the RISK-FREE RATE, t is the time to maturity, and e is the exponential constant.	palgrave	39.68	19.6	0	5.59	21.5	10.95	28	21.7
PUT-CALL RATIO	The ratio of OPEN INTEREST in EXCHANGE-TRADED PUT OPTIONS to CALL OPTIONS, and an indicator of market sentiment; a put-call ratio that favors puts may be indicative of BEARISH sentiment, while one that favors calls may indicate a BULLISH sentiment.	palgrave	22.42	20.1	0	12.78	23.2	10.75	28	21
PUT ON A CALL	A COMPOUND OPTION that grants the buyer the right to sell an underlying CALL OPTION to the seller of the compound. See also CALL ON A CALL, CALL ON A PUT, PUT ON A PUT.	palgrave	79.09	6.6	0	3.94	5.4	7.21	8.25	8.14
PUT ON A PUT	A COMPOUND OPTION that grants the buyer the right to sell an underlying PUT OPTION to the seller of the compound. See also CALL ON A CALL, CALL ON A PUT, PUT ON A CALL.predefined STRIKE PRICE and the best performing ASSET in a PORTFOLIO. See also CALL ON THE BEST OF N-ASSETS, CALL ON THE WORST OF N-ASSETS, MULTI-INDEX OPTION, OPTION ON THE BEST/WORST OF N-ASSETS, PUT ON THE WORST OF N-ASSETS.	palgrave	63.73	10.4	10.5	7.43	11.6	8.09	13.833333	11.91
PUT ON THE MINIMUM	An OVER-THE-COUNTER COMPLEX OPTION that grants the buyer a PAYOFF based on the difference between a predefined STRIKE PRICE and the lowest price achieved by the UNDERLYING reference ASSET over the life of the transaction. See also OPTION ON THE MAXIMUM/ MINIMUM, CALL ON THE MAXIMUM, LOOKBACK OPTION.	palgrave	47.12	12.7	0	12.77	15.4	10.42	16.5	14.6
PUT OPTION	A DERIVATIVE CONTRACT that gives the buyer the RIGHT, but not the obligation, to sell an UNDERLYING ASSET to the seller at a set STRIKE PRICE at, or before, EXPIRY; in exchange, the buyer pays the seller a PREMIUM. The PAYOFF to the put buyer is given as:max(0, strike price – asset price)Puts, which can be written on a broad range of financial and COMMODITY references, are available as EXCHANGE-traded and OVER-THE-COUNTER con- tracts, and can be structured as AMERICAN OPTIONS, BERMUDAN OPTIONS, or EUROPEAN OPTIONS.Long put payoff profileShort put payoff profileSee also CALL OPTION.	palgrave	23.26	21.8	0	12.43	26.8	11.15	30.25	22.79
PUT PRICE	The price INVESTORS can expect to receive for a PUTABLE BOND if the OPTION to put the securities back to the ISSUER is exercised. Also known as REDEMPTION PRICE.	palgrave	73.68	6.6	0	8.34	7.4	8.71	7.75	9.94
PUT PROTECTED EQUITY	A CONTINGENT EQUITY facility where a company buys a PUT OPTION on its own COMMON STOCK from an INTERMEDIARY, generating an economic gain which increases RETAINED EARNINGS if the value of its stock declines (such as in the aftermath of a large loss resulting from a CATASTROPHIC HAZARD). See also LOSS EQUITY PUT.	palgrave	36.12	14.8	0	10.91	14.9	10.02	19.25	18.15
PUT PROVISION	A clause contained in the INDENTURE of a BOND that spe- cifies the terms under which the INVESTOR may PUT the outstanding SECUR- ITIES to the ISSUER. The provision indicates the PUT PRICE and any relevant LOCKOUT PERIOD. See also CALL PROVISION.	palgrave	65.73	7.6	11.9	9.62	8.5	10.72	8.333333	11.31
PUT SWAPTION	See PAYER SWAPTION.	palgrave	59.97	5.6	0	5.35	6.8	14.31	0.5	1.2
PUTABLE ASSET SWAP	A structured DERIVATIVE comprised of a PUTABLE SWAP and an underlying BOND. The INVESTOR in the structure retains a PUT OPTION on the bond, allowing it to sell the package back to the seller at a given STRIKE CREDIT SPREAD. If the spread widens during the life of thetransaction (e.g., the price of the asset falls as a result of specific or general market/credit conditions), the investor puts the package to the seller, receiving PRINCIPAL and INTEREST defined by the strike spread. See also CALLABLE ASSET SWAP.	palgrave	57.81	10.6	12.6	10.39	12.6	10.16	13.625	12.86
PUTABLE COMMON STOCK	A form of COMMON STOCK where the issu- ing company floats SHARES that feature a PUT OPTION agreement, giving INVESTORS the right to sell the stock back to the company at a future time and STRIKE price. Such issues are not particularly common, as a falling stock price moves the investor’s option IN-THE-MONEY, precisely when the company may be experiencing FINANCIAL DISTRESS. See also CALLABLE COMMON STOCK.	palgrave	57.3	10.8	11.9	11.84	13.8	9.69	13.5	11.31
PUTABLE CONVERTIBLE BOND	A CONVERTIBLE BOND that contains a PUT OPTION which gives INVESTORS the RIGHT to sell the SECURITIES back to the ISSUER at a PREMIUM to PAR VALUE on a specific date(s); in exchange for granting investors the put, the issuer obtains a lower COUPON. The puta- ble structure is offered in one of two forms: a single premium put, allowing for a one-time EXERCISE (commonly used in the EUROMARKETS) and a roll- ing premium put, allowing for multiple exercise opportunities on predefined dates. See also CONDITIONAL PUT CONVERTIBLE BOND.	palgrave	41.33	14.9	16.7	11.21	16.9	10.61	20.5	17.27
PUTABLE SWAP	An OVER-THE-COUNTER SWAP structure that gives the institution receiving FIXED RATES the OPTION to cancel the transaction at a future date. See also CALLABLE SWAP, CANCELLABLE SWAP.	palgrave	57.77	8.6	0	14.14	12.2	11.91	7.75	9.84
PYRAMID	A corporate structure that relies on the use of HOLDING COMPANIES and SUBSIDIARIES to generate multiple layers of FINANCING. A pyramid structure is legal but adds complexity to the analysis process, and may be difficult for LENDERS to monitor.	palgrave	43.22	12.1	0	12.76	13.1	12.3	14.25	17.03
QFII	See QUALIFIED FOREIGN INSTITUTIONAL INVESTORS.	palgrave	-18.21	17	0	25.84	20.6	16.52	3.5	18
QIB	See QUALIFIED INSTITUTIONAL BUYER.	palgrave	-34.11	19	0	20.3	17.1	15.68	3	21.6
QUAD WITCH	See QUADRUPLE WITCHING DAY.	palgrave	75.88	3.7	0	10.15	8.8	11.73	1	1.6
QUADRUPLE WITCHING DAY	A single business day when INDEX FUTURES, index OPTIONS, individual EQUITY options and SINGLE STOCK FUTURES all settle simultaneously, which occurs once each quarter (i.e., the third Friday in March, June, September, and December). There is evidence to indicate that volume and VOLATILITY increase during these days as market participants rebalance their positions. See also TRIPLE WITCHING DAY.	palgrave	34.97	13.2	14.1	15.14	15.7	9.77	13.333333	13.93
QUALIFIED INSTITUTIONAL BUYER	An INSTITUTIONAL INVESTOR that is authorized to purchase and sell to other QIBs and DEALERS PRIVATE PLACEMENTS and other SECURITIES that have not been floated in the public markets. The QIB resale mechanism injects additional LIQUIDITY into otherwise UNMARKETABLE SECURITIES. In the United States, aSECURITIES AND EXCHANGE COMMISSION SAFE HARBOR, RULE 144A, allows QIB resales provided that the number of QIBs and the minimum size of their participation are specified in the selling documents or private place- ment agreement.	palgrave	27.86	15.9	16.3	15.38	18.4	11.14	18.5	17.61
QUANGO	See QUASI AUTONOMOUS NONGOVERNMENTAL ORGANIZATION.	palgrave	-52.05	21.8	0	30.48	24.4	16.52	4.5	26
QUANTITATIVE EASING	A form of MONETARY POLICY where govern- ment authorities purchase GOVERNMENT SECURITIES from the open market, thereby increasing MONEY SUPPLY. This policy tends to be enacted when fur- ther easing is required but INTEREST RATES are already near 0% and cannot be reduced further.	palgrave	40.69	13.1	0	12.88	14.7	11.19	15.5	15.16
QUANTITY THEORY OF MONEY	An economic theory put forth by philoso- pher David Hume in the eighteenth century (and popularized by others since) which relates the level of prices with the amount of MONEY in the system. In particular, the following relationship is proposed:where M is the amount of money in circulation, V is the VELOCITY OF MONEY, P is the level of prices, Q is the real output of an economy.	palgrave	36.97	16.6	0	9.24	17.3	10.9	22.5	18.89
QUANTO	An OPTION that converts gains from an underlying DERIVATIVE into a target CURRENCY at a predetermined FOREIGN EXCHANGE RATE. The quanto allows an INVESTOR to participate in a foreign market/ASSET while protecting it from exchange rate RISK. Also known as GUARANTEED EXCHANGE RATE OPTION, QUANTITY ADJUSTED OPTION.	palgrave	30.16	13	13.6	14.73	13.2	10.8	11.166667	13.94
QUANTO SWAP	See DIFFERENTIAL SWAP.	palgrave	34.59	9.2	0	11.15	11.5	14.31	1.5	14.53
QUASI ARBITRAGE	Any ARBITRAGE strategy that makes use of internal, rather than external or borrowed, funds. See also PURE ARBITRAGE.	palgrave	53.88	8	0	11.57	9	10.22	6	12.49
(QUANGO)	A semigovernmental organization that is financed by, and fea- tures specific authorities that have been devolved from, a national or state government. See also GOVERNMENT-SPONSORED ENTERPRISE, QUASI AUTONOMOUS NONGOVERNMENTAL ORGANIZATION.to include cash, MARKETABLE SECURITIES (e.g., FIXED INCOME SECURITIES, Q COMMON STOCK, PREFERRED STOCK) and ACCOUNTS RECEIVABLE. Thequick asset measure is precisely equal to CURRENT ASSETS less INVENTORY. See also QUICK RATIO.	palgrave	22.11	14	14.6	18.9	17.5	12.68	11.625	13.99
QUICK RATIO	A measure of a company’s ability to meet OBLIGATIONS that are coming due with its most LIQUID ASSETS, typically computed as:where QA is QUICK ASSETS and CL is CURRENT LIABILITIES.A quick ratio above 1.0 indicates that the company has sufficient CASH FLOW from maturing or saleable assets to meet its short-term OBLIGATIONS; a ratio below 1.0 suggests the possibility of LIQUIDITY RISK pressures. Since the quick ratio only includes truly liquid assets as a potential source of cash, it is a more con- servative measure than the CURRENT RATIO. Also known as LIQUID RATIO.	palgrave	39.71	15.5	15.9	12.02	18.1	9.89	20.666667	18.05
QUIET PERIOD	The period of time during which a company in the process of registering a NEW ISSUE of SECURITIES is prohibited from releasing any public relations material or other sensitive information.	palgrave	7.19	19.7	0	13.88	18.5	10.91	25	24
QUOTA	An allotment or maximum amount; in the context of TRADE it relates to the specific amount of a good or COMMODITY that can be IMPORTED orEXPORTED.	palgrave	45.09	13.4	0	9.35	13.3	9.78	19	19.63
QUOTA SHARE	In REINSURANCE, a PROPORTIONAL AGREEMENT where an INSURER and REINSURER agree to split PREMIUMS, RISKS, losses, and LOSS ADJUSTMENT EXPENSES as a fixed percentage of the policy limit rather than a specific monetary amount. See also SURPLUS SHARE.	palgrave	43.73	11.9	0	13.69	14	12.06	15	19.18
QUOTATION	(1) An estimate of the cost of a particular service or coverage, as in INSURANCE. (2) An indication of the price of a SECURITY or other ASSET. Also known as QUOTE. (2) See also FIRM QUOTE, INDICATIVE QUOTE.	palgrave	52.19	10.7	0	6.67	9	9.57	13	14.97
QUOTE	See QUOTATION.	palgrave	35.61	8.8	0	4.2	10.2	11.63	1	20.8
QUOTE-DRIVEN MARKET	A marketplace where DEALERS or MARKET MAKERS give prices to BROKERS or TRADERS, who can then buy or sell. Prices are typically adjusted to reflect ORDER flow and SUPPLY and DEMAND forces. Institutional OVER-THE-COUNTER markets are often quote driven. See alsoDEALER MARKET, ORDER-DRIVEN MARKET.	palgrave	51.85	8.8	10.7	13.44	10.9	9.92	6.25	8.95
QUOTED SPREAD	The difference between the BID and the OFFER before a transaction occurs; the quoted spread may be a FIRM QUOTE or an INDICATIVE QUOTE.	palgrave	55.58	11.5	0	9.58	12.6	8.77	15	12.93
R-SQUARED	See COEFFICIENT OF DETERMINATION.	palgrave	-34.11	19	0	18.85	15.9	11.73	3	21.6
RAIDER	A hostile acquirer that attempts to purchase another com-pany, often to engage in ASSET STRIPPING or to receive GREENMAIL pay-ments. Although raiders were especially active during the HOSTILE TAKEOVERphase of the 1980s, they still exist.	palgrave	45.25	11.3	0	15.08	14.6	12.63	10.75	9.29
RAINBOW OPTION	See MULTI-INDEX OPTION.	palgrave	9.21	12.7	0	11.15	13	19.58	1.5	1.2
RAINMAKER	A financial services professional that is capable ofgenerating a significant amount of new business for an employing BANK orINVESTMENT BANK. The rainmaker generally refers to bankers that are cap-able of winning MANDATES to arrange NEW ISSUES or CORPORATE FINANCEtransactions, but can also apply to institutional salespeople, BROKERS, or trad-ers that are extremely successful in their respective areas.	palgrave	17.17	17.9	0	17.58	21.5	12.53	22.75	22.63
RALLY	A rise in the price of a SECURITY or market, which is seen as aBULLISH signal. A rally may be of short or long duration, depending on funda-mental and technical factors. See also RELIEF RALLY.	palgrave	59.6	7.9	10.5	6.71	5.6	9.18	6.5	9.25
RAMPING	The process of trying to push up the value of a STOCK orother SECURITY through a combination of short-term buying and spreadingof positive news, with the aim of trying to secure a short-term price rise so thatan existing LONG POSITION can be sold at a profit.	palgrave	33.25	20.1	0	10.11	23.5	10.38	28	22.75
RANDOM VARIABLE	An event or observation with an uncertain outcome;a random variable may be discrete (appearing at specified time intervals) orcontinuous (appearing at any time), and it may be limited to a defined value orcarry any value. Samplings of random variables are often used in SIMULATIONprocesses that generate ASSET prices or distributions.	palgrave	20.72	16.6	0	15.15	17.9	11.51	18.5	18.8
RANDOM WALK	A financial theory indicating that ASSET prices move inperiod associated with the asset observations, the greater the possible dispersionof prices. More formally, the random walk is a STOCHASTIC PROCESS whereasset prices are RANDOM VARIABLES, with each price increment independentand identically distributed. See also EFFICIENT MARKET HYPOTHESIS.Additional references: Cootner (1964); Samuelson (1965).	palgrave	11.92	15.8	17.1	20.99	19.6	13.15	14.5	20.92
RANGE FLOATER	See RANGE FLOATING RATE NOTE.the INVESTOR with an enhanced COUPON if the FLOATING RATE referencetrades within a predefined range; for every day the reference falls outside theband the investor loses one day’s interest. The security is effectively a standardFRN with a strip of embedded BINARY OPTIONS. Also known as ACCRUALNOTE, DAY COUNT NOTE, RANGE FLOATER. See also CAPPED FLOATING RATE NOTE, INVERSE FLOATING RATE NOTE, PERPETUAL FLOATING RATE NOTE, RANGE KNOCK-OUT FLOATING RATE NOTE.	palgrave	52.7	10.5	12.6	14.39	14.3	9.89	12	13.35
RANGE FORWARD	See ZERO COST COLLAR.	palgrave	75.88	3.7	0	1.45	1.8	7.78	1	1.6
RANGE KNOCK-OUT FLOATER	See RANGE KNOCK-OUT FLOATING RATE NOTE.	palgrave	90.77	2.1	0	10.08	8.3	9.2	2	2.4
RAROC	See RISK-ADJUSTED RETURN ON CAPITAL.	palgrave	32.56	10	0	13.08	11.2	10.2	3.5	10
RATCHET OPTION	See CLIQUET OPTION.	palgrave	59.97	5.6	0	5.35	6.8	14.31	0.5	1.2
RATE	See INTEREST .	palgrave	-6.7	14.7	0	1.3	7.8	11.63	1.5	20.8
RATE LOCK	A mechanism that guarantees a BORROWER an underlying INTEREST RATE on a LOAN for a period ranging from 30 to 90 days. The rate lock ensures the borrower faces a known financing cost, as long as the loan is concluded during the effective period. Also known as LOCK-IN PROVISION. See also DROP LOCK, SPREAD LOCK.	palgrave	65.93	7.5	13	8.4	7.3	8.91	8.875	12.79
RATE MAKING	In INSURANCE, the process of establishing PREMIUM rates so that they adequately cover EXPECTED LOSSES and are reasonable and non- discriminatory. When supplemented by relevant LOAD factors, the INSURER obtains the FAIR PREMIUM that it charges INSUREDS. See also EXPENSE LOADING, PREMIUM LOADING, PURE PREMIUM.	palgrave	30.87	12.7	15	15.25	13.8	11.4	11.833333	14.89
RATE OF EXCHANGE	See FOREIGN EXCHANGE RATE.	palgrave	75.88	3.7	0	8.7	7.7	7.78	1	1.6
RATE OF INTEREST	See INTEREST RATE.	palgrave	59.97	5.6	0	3.43	5.2	9.05	1.5	14.53
RATE ON LINE	A measure of an INSURER’s or REINSURER’s gross profitabil- ity, generally calculated as:where Pr is PREMIUM and Line is the amount of the LINE provided by the insurer or reinsurer.The higher the rate on line, the more gross profit the insurer earns.	palgrave	28.85	19.7	0	11.51	22.9	11.36	30	24.42
RATE-SENSITIVE ASSETS	ASSETS of a FINANCIAL INSTITUTION that are exposed to changes in INTEREST RATES (e.g., FIXED INCOME INVESTMENTS,REVERSE REPURCHASE AGREEMENTS, LOANS). Measurement of rate-sensi- tive assets is an essential component of GAP MANAGEMENT; by determining sensitivity to changes in interest rates, a financial institution can manage its exposure to DIRECTIONAL RISK, CURVE RISK, and REPRICING RISK. See alsoASSET MANAGEMENT, RATE-SENSITIVE LIABILITIES.	palgrave	17.34	15.8	18.2	18.39	18.9	13.05	17	18.67
RATE-SENSITIVE LIABILITIES	LIABILITIES of a FINANCIAL INSTITUTION that are exposed to changes in INTEREST RATES (e.g., DEPOSITS, REPURCHASE AGREEMENTS, BONDS). Measurement of rate-sensitive liabilities is an essential component of GAP MANAGEMENT; by determining sensitivity to changes in interest rates, a financial institution can manage its exposure to DIRECTIONAL RISK, CURVE RISK, and REPRICING RISK. See also ASSET MANAGEMENT, RATE-SENSITIVE ASSETS.	palgrave	18.05	15.5	17.9	18.04	18.3	12.22	16.333333	17.38
RATIO ANALYSIS	A financial analysis technique used by INVESTMENT ANALYSIS and CREDIT ANALYSTS that uses ACCOUNTING information from a company’s FINANCIAL STATEMENTS to compute relative and abso- lute strength/weakness in key areas such as profitability, activity, liquidity, LEVERAGE, and SOLVENCY.	palgrave	-9.4	24	0	19.79	28	14.66	34	27.83
RATIO SWAP	See POWER SWAP.	palgrave	93.81	0.9	0	-2.38	0.5	9.05	0.5	1.2
RATIO VERTICAL SPREAD	An OPTION SPREAD that is designed to gener- ate profits from VOLATILITY. Ratio vertical spreads are created through the purchase of a smaller quantity of closer-to-the-money PUT OPTIONS or CALL OPTIONS and the sale of a larger quantity of farther-from-the-money puts or calls. See also BACKSPREAD.	palgrave	55.95	9.3	11.9	12.64	12	10.57	9	9.6
RATIO WRITING	An OPTION position where an option writer sells a com- bination of COVERED OPTIONS and NAKED OPTIONS, in specific quantities or ratios. The RISKS associated with the strategy are lower than they are with a pure naked option strategy, but higher than on a covered option approach.	palgrave	47.62	12.5	0	11.15	13.7	10.85	15.25	14.51
RATIONALIZATION	A process undertaken by a company to reduce its oper- ations in order to improve efficiencies and lower costs. Rationalization may involve the disposal of certain business lines or operating SUBSIDIARIES, the closure of production facilities and/or the dismissal of some amount of employ- ees. See also DOWNSIZING, RIGHTSIZING.	palgrave	38.01	12	13.6	14.5	13.5	11.53	11.5	13.87
RAW MATERIAL INVENTORY	A class of INVENTORY held by a com- pany that includes all materials and resources used in the production ofgoods intended for sale. See also FINISHED GOODS INVENTORY, WORK-IN-PROCESS INVENTORY.	palgrave	39.33	11.5	0	12.87	12	10.17	11	11.33
RBA	See RESERVE BANK OF AUSTRALIA.	palgrave	83.32	2.9	0	7.28	5.6	10.2	1.5	2
REACQUIRED STOCK	See TREASURY STOCK.	palgrave	93.81	0.9	0	5.35	6.8	9.05	0.5	1.2
REAL EXCHANGE RATE	A FOREIGN EXCHANGE RATE that has been cali- brated to take account of INFLATION.	palgrave	74.19	6.4	0	9.04	8.1	8.84	7	8.46
REAL INTEREST RATE	The core level of INTEREST RATES, excluding the effects of INFLATION, typically computed as:=11 + rinfwhere rreal is the real rate, rnom is the nominal rate, and rinf is the inflation rate. See also NOMINAL INTEREST RATE, REAL YIELD.	palgrave	43.73	11.9	0	10.97	12.2	10.81	14.25	13.92
REAL MONEY ACCOUNT	See REAL MONEY INVESTOR.	palgrave	50.5	7.2	0	5.8	5.3	7.78	1	1.6
REAL OPTION	The right, but not the obligation, a company has to enter into a new CAPITAL INVESTMENT or to exit an existing capital investment. The general concept is based on the framework developed for financial OPTIONS, though real option decisions tend to be much more complex and opaque. The associated VALUATION process is used as an alternativeor supplement to more traditional CAPITAL BUDGETING and DISCOUNTED CASH FLOW exercises. In general, real options cannot be traded between par- ties, though some real options can be sold to other parties.	palgrave	32.43	14.2	16.2	12.36	14.1	9.62	16.125	15.16
REAL OPTION ANALYSIS	See REAL OPTION VALUATION.	palgrave	8.2	13.1	0	8.7	7.7	11.73	2	11.6
REAL OPTION VALUATION	A framework used to evaluate REAL OPTIONS that attempts to factor in the multiplicity of decisions that exist in a typical INVESTMENT project (e.g., initial investment, expansion, abandonment, deferral of funding, and so forth). In order to take account of these multiple decisions, their associated uncertainties and an array of EXERCISE possibil- ities, the real option valuation framework employs RISK-adjusted probabilities and LATTICE MODELS to generate a quantitative result. Also known as REAL OPTION ANALYSIS.	palgrave	12.26	17.8	18.2	16.02	18.9	12.67	19.5	20.13
REAL RETURN BOND	In Canada, an INFLATION-LINKED SECURITY.	palgrave	-1.29	14.7	0	16.56	15	16.52	3.5	18
REAL YIELD	The YIELD on a SECURITY that has been calibrated to take account of INFLATION. Real yield is lower than the computed or nominal yield in an inflationary environment.	palgrave	40.35	11.1	0	10.32	8.8	9.41	10.5	15.6
REALIZED GAIN	Gains on an ASSET (resulting from a positive change in valuation) that have been crystallized for ACCOUNTING purposes on the INCOME STATEMENT. A gain is realized through disposal of the asset. See also REALIZED LOSS, UNREALIZED PROFIT.	palgrave	42.07	10.4	13.6	12.11	10.1	9.79	8.5	14.65
REALIZED LOSS	Losses on an ASSET (resulting from a negative change in valuation) that have been crystallized for ACCOUNTING purposes on the INCOME STATEMENT. A loss is realized through disposal of the asset. See alsoREALIZED GAIN, UNREALIZED LOSS.	palgrave	42.38	10.3	13.6	12.75	10.5	9.93	8.333333	15.91
REALIZED SPREAD	The difference between the weighted average of the BIDS and OFFERS of executed SECURITIES transactions over a specific period of time. See also EFFECTIVE SPREAD, QUOTED SPREAD.	palgrave	32.39	12.1	0	13.68	11.5	10.74	10.75	15.77
REBALANCING	(1) The process of adjusting an INVESTMENT PORTFOLIO by adding or removing certain SECURITIES or ASSETS to reflect a change in the market. (2)The process of adjusting an existing HEDGE after a market move in order to preserve its efficacy in neutralizing RISK.	palgrave	19.37	21.2	0	12.2	23.9	12.01	30.5	24.64
REBATE	(1) A refund, provided by a company to its customers, related to the purchase of specified goods or services (2) A refund provided by an INTERMEDIARY to a client executing a TRADE.	palgrave	30.54	17	0	9.06	16.5	11.14	23	19.05
RECEIVABLE	See ACCOUNTS .	palgrave	35.61	8.8	0	1.3	7.8	11.63	0.5	0.8
RECEIVER	A party named by a BANKRUPTCY court to act as AGENT for a bankrupt DEBTOR while maintaining ASSETS for the benefit of CREDITORS. A receiver may be given different levels of operating discretion by the courts, from managing the business of the company in bankruptcy to simply deal- ing with the disposal of property. Also known as ADMINISTRATOR. See alsoRECEIVERSHIP.	palgrave	42.72	12.3	15.9	11.84	12.7	10.16	15	16
RECEIVER EXTENDIBLE SWAP	An EXTENDIBLE SWAP that is formed from a combination of a fixed receiver SWAP and a RECEIVER SWAPTION.	palgrave	61.67	9.1	0	9.51	9.8	10.67	12	11.64
RECEIVER SWAPTION	A SWAPTION granting the buyer the right to enter into an OVER-THE-COUNTER INTEREST RATE SWAP to receive FIXED RATES and pay FLOATING RATES. The buyer will to EXERCISE the receiver swaption as floating rates fall below a particular STRIKE PRICE. Also known as CALL SWAPTION. See also PAYER SWAPTION.	palgrave	58.99	8.1	9.5	10.72	8.7	8.44	6.375	8.19
RECEIVERSHIP	A state where a company has filed for BANKRUPTCY and is being overseen by a RECEIVER until courts decide on LIQUIDATION orREORGANIZATION.	palgrave	32.22	14.2	0	13.05	14.4	9.75	16	16.07
RECESSION	A period of economic contraction within a national ECONOMY as part of the ongoing BUSINESS CYCLE. A recession, which may be defined as two or more consecutive quarters of falling output (as measured through GROSS DOMESTIC PRODUCT), may feature falling INVESTMENT and rising UNEMPLOYMENT. See also DEPRESSION.	palgrave	38.62	11.8	14.6	13.92	12.6	11.81	11.833333	16.49
RECIPROCAL EXCHANGE	An unincorporated association where INSUREDS amalgamate their RISKS in order to insure one another; existing membersactively attempt to recruit new members to spread risks even more widely. The affairs of the reciprocal exchange, including collection of PREMIUMS, adjustment of losses, and payment of CLAIMS, are often administered by an ATTORNEY-IN-FACT. Also known as RECIPROCAL INSURANCE EXCHANGE.	palgrave	18.65	15.3	15.9	17.4	16.9	11.05	14.333333	16.77
RECIPROCAL RATE	The inverse of the commonly quoted FOREIGN EXCHANGE RATE for a given CURRENCY pair. While the foreign exchange markets typically quote in terms of currency per US dollar or US dollar per currency, the reciprocal rate denominates the same quote in inverse terms. See also AMERICAN TERMS, EUROPEAN TERMS.	palgrave	46.47	10.8	13	11.89	11.1	8.63	11.166667	11.42
RECIPROCITY	In general, the exchange between two parties of certain actions or services for receipt of substantial similar actions or services. In BANKING reciprocity is commonly encountered in CAPITAL-raising, DEPOSIT, and UNDERWRITING activities.	palgrave	12.94	15.4	0	18.5	16.8	10.84	12.5	15.15
RECOMBINING TREE	See LATTICE MODEL.	palgrave	59.97	5.6	0	3.43	5.2	14.31	0.5	1.2
RECONCILIATION	In ACCOUNTING the process of comparing DEBITS and CREDITS on transactions flowing through a company’s ledgers to ensure proper treatment and balance. Reconciliation may be carried out on a formal basis every week, month, or quarter.	palgrave	44.75	11.5	0	13.51	13.3	11.55	11.5	12.76
RECOUPONING	The process of MARKING-TO-MARKET and settling a PORTFOLIO of DERIVATIVES in order to reduce ACTUAL EXPOSURE between COUNTERPARTIES. A net cash SETTLEMENT is paid to the party holding the contracts with current value and the derivatives are then rewritten, or recou- poned, at current market levels. The process is then repeated at a future settle- ment period.	palgrave	43.73	11.9	13.6	12.76	13.2	10.12	12.833333	12.51

PUNTER

A SPECULATOR.

palgrave

0

-6.7

14.7

0

1.3

7.8

11.63

1

20.8

PUP COMPANY

The subsidiary of an INSURER that writes SPECIAL RISK INSURANCE on behalf of the parent company or other group companies.ACCOUNTING.

palgrave

0

34.26

13.5

0

14.91

15.2

11.73

14

16

PURCHASED GOODWILL

Any form of GOODWILL that a company obtains through the ACQUISITION of another company or business.

palgrave

0

38.32

11.9

0

12.53

11.3

7.39

12

8.9

PURE ARBITRAGE

(1) Any ARBITRAGE strategy that makes use of external, or borrowed, funds rather than internal funds. (2) Any arbitrage strategy that is executed in a truly riskless manner, by simultaneously buying and selling the same ASSET in different MARKETS to take advantage of a price discrepancy. (1,2) See also QUASI ARBITRAGE.

palgrave

0

11.25

24.4

0

12.84

29

12.36

37.5

26.67

PURE BOND VALUE

See INVESTMENT VALUE.

palgrave

0

34.59

9.2

0

9.23

9.9

9.05

1.5

14.53

PURE CATASTROPHE SWAP

An OVER-THE-COUNTER SWAP trans- action that allows INSURERS or REINSURERS to exchange uncorrelated CATASTROPHIC HAZARDS in their PORTFOLIOS in order to improve DIVERSIFICATION. See also CATASTROPHE REINSURANCE SWAP.

palgrave

0

14.97

14.7

0

20.06

17.2

11.66

11.5

17.03

PURE PLAY

A company that is very focused in its business operations and has little or no DIVERSIFICATION in other areas. This often makes it sim- pler for INVESTORS to discern the RISKS and RETURNS that can be obtained from investing in such a company’s STOCK.

palgrave

0

57.61

10.7

0

9.63

11.7

9.75

13.5

12.44

PURE PREMIUM

The amount an INSURER needs to charge to cover EXPECTED LOSSES and LOSS ADJUSTMENT EXPENSES; pure premium is one of two components, along with PREMIUM LOADING, used to determine FAIR PREMIUM. See also EXPENSE LOADING.

palgrave

0

45.25

11.3

0

11.95

12

9.47

13.25

15

PURE PREMIUM RATING METHOD

A method of determining the PREMIUM on PROPERTY AND CASUALTY INSURANCE that excludes PREMIUM LOADING factors, generally computed as:where Loss is the amount of losses per year, LAE is the LOSS ADJUSTMENT EXPENSE per year, and U is the number of exposure units (e.g., policies).

palgrave

0

17.34

22

0

12.38

25.5

13.59

32.5

26

PURE RISK

A RISK exposure that can result only in a loss or no loss, but no possibility of a gain. Also known as STANDARD RISK. See also SPECULATIVE RISK.

palgrave

0

70.5

5.7

8.8

4.38

2.9

7.48

4.666667

8.01

PURPOSE LOAN

A LOAN, collateralized by SECURITIES and subject to MARGIN rules, where the proceeds are used to purchase other securities. Also known as MARGIN LOAN. See also NON.

palgrave

0

53.88

8

8.8

9.54

7.1

8.18

4.5

6.56

PUT

See OPTION.where c is the price of the call option, X is the strike price, p is the price of the put option, S is the underlying STOCK (or asset) price, rf is the RISK-FREE RATE, t is the time to maturity, and e is the exponential constant.

palgrave

0

39.68

19.6

0

5.59

21.5

10.95

28

21.7

PUT-CALL RATIO

The ratio of OPEN INTEREST in EXCHANGE-TRADED PUT OPTIONS to CALL OPTIONS, and an indicator of market sentiment; a put-call ratio that favors puts may be indicative of BEARISH sentiment, while one that favors calls may indicate a BULLISH sentiment.

palgrave

0

22.42

20.1

0

12.78

23.2

10.75

28

21

PUT ON A CALL

A COMPOUND OPTION that grants the buyer the right to sell an underlying CALL OPTION to the seller of the compound. See also CALL ON A CALL, CALL ON A PUT, PUT ON A PUT.

palgrave

0

79.09

6.6

0

3.94

5.4

7.21

8.25

8.14

PUT ON A PUT

A COMPOUND OPTION that grants the buyer the right to sell an underlying PUT OPTION to the seller of the compound. See also CALL ON A CALL, CALL ON A PUT, PUT ON A CALL.predefined STRIKE PRICE and the best performing ASSET in a PORTFOLIO. See also CALL ON THE BEST OF N-ASSETS, CALL ON THE WORST OF N-ASSETS, MULTI-INDEX OPTION, OPTION ON THE BEST/WORST OF N-ASSETS, PUT ON THE WORST OF N-ASSETS.

palgrave

0

63.73

10.4

10.5

7.43

11.6

8.09

13.833333

11.91

PUT ON THE MINIMUM

An OVER-THE-COUNTER COMPLEX OPTION that grants the buyer a PAYOFF based on the difference between a predefined STRIKE PRICE and the lowest price achieved by the UNDERLYING reference ASSET over the life of the transaction. See also OPTION ON THE MAXIMUM/ MINIMUM, CALL ON THE MAXIMUM, LOOKBACK OPTION.

palgrave

0

47.12

12.7

0

12.77

15.4

10.42

16.5

14.6

PUT OPTION

A DERIVATIVE CONTRACT that gives the buyer the RIGHT, but not the obligation, to sell an UNDERLYING ASSET to the seller at a set STRIKE PRICE at, or before, EXPIRY; in exchange, the buyer pays the seller a PREMIUM. The PAYOFF to the put buyer is given as:max(0, strike price – asset price)Puts, which can be written on a broad range of financial and COMMODITY references, are available as EXCHANGE-traded and OVER-THE-COUNTER con- tracts, and can be structured as AMERICAN OPTIONS, BERMUDAN OPTIONS, or EUROPEAN OPTIONS.Long put payoff profileShort put payoff profileSee also CALL OPTION.

palgrave

0

23.26

21.8

0

12.43

26.8

11.15

30.25

22.79

PUT PRICE

The price INVESTORS can expect to receive for a PUTABLE BOND if the OPTION to put the securities back to the ISSUER is exercised. Also known as REDEMPTION PRICE.

palgrave

0

73.68

6.6

0

8.34

7.4

8.71

7.75

9.94

PUT PROTECTED EQUITY

A CONTINGENT EQUITY facility where a company buys a PUT OPTION on its own COMMON STOCK from an INTERMEDIARY, generating an economic gain which increases RETAINED EARNINGS if the value of its stock declines (such as in the aftermath of a large loss resulting from a CATASTROPHIC HAZARD). See also LOSS EQUITY PUT.

palgrave

0

36.12

14.8

0

10.91

14.9

10.02

19.25

18.15

PUT PROVISION

A clause contained in the INDENTURE of a BOND that spe- cifies the terms under which the INVESTOR may PUT the outstanding SECUR- ITIES to the ISSUER. The provision indicates the PUT PRICE and any relevant LOCKOUT PERIOD. See also CALL PROVISION.

palgrave

0

65.73

7.6

11.9

9.62

8.5

10.72

8.333333

11.31

PUT SWAPTION

See PAYER SWAPTION.

palgrave

0

59.97

5.6

0

5.35

6.8

14.31

0.5

1.2

PUTABLE ASSET SWAP

A structured DERIVATIVE comprised of a PUTABLE SWAP and an underlying BOND. The INVESTOR in the structure retains a PUT OPTION on the bond, allowing it to sell the package back to the seller at a given STRIKE CREDIT SPREAD. If the spread widens during the life of thetransaction (e.g., the price of the asset falls as a result of specific or general market/credit conditions), the investor puts the package to the seller, receiving PRINCIPAL and INTEREST defined by the strike spread. See also CALLABLE ASSET SWAP.

palgrave

0

57.81

10.6

12.6

10.39

12.6

10.16

13.625

12.86

PUTABLE COMMON STOCK

A form of COMMON STOCK where the issu- ing company floats SHARES that feature a PUT OPTION agreement, giving INVESTORS the right to sell the stock back to the company at a future time and STRIKE price. Such issues are not particularly common, as a falling stock price moves the investor’s option IN-THE-MONEY, precisely when the company may be experiencing FINANCIAL DISTRESS. See also CALLABLE COMMON STOCK.

palgrave

0

57.3

10.8

11.9

11.84

13.8

9.69

13.5

11.31

PUTABLE CONVERTIBLE BOND

A CONVERTIBLE BOND that contains a PUT OPTION which gives INVESTORS the RIGHT to sell the SECURITIES back to the ISSUER at a PREMIUM to PAR VALUE on a specific date(s); in exchange for granting investors the put, the issuer obtains a lower COUPON. The puta- ble structure is offered in one of two forms: a single premium put, allowing for a one-time EXERCISE (commonly used in the EUROMARKETS) and a roll- ing premium put, allowing for multiple exercise opportunities on predefined dates. See also CONDITIONAL PUT CONVERTIBLE BOND.

palgrave

0

41.33

14.9

16.7

11.21

16.9

10.61

20.5

17.27

PUTABLE SWAP

An OVER-THE-COUNTER SWAP structure that gives the institution receiving FIXED RATES the OPTION to cancel the transaction at a future date. See also CALLABLE SWAP, CANCELLABLE SWAP.

palgrave

0

57.77

8.6

0

14.14

12.2

11.91

7.75

9.84

PYRAMID

A corporate structure that relies on the use of HOLDING COMPANIES and SUBSIDIARIES to generate multiple layers of FINANCING. A pyramid structure is legal but adds complexity to the analysis process, and may be difficult for LENDERS to monitor.

palgrave

0

43.22

12.1

0

12.76

13.1

12.3

14.25

17.03

QFII

See QUALIFIED FOREIGN INSTITUTIONAL INVESTORS.

palgrave

0

-18.21

17

0

25.84

20.6

16.52

3.5

18

QIB

See QUALIFIED INSTITUTIONAL BUYER.

palgrave

0

-34.11

19

0

20.3

17.1

15.68

3

21.6

QUAD WITCH

See QUADRUPLE WITCHING DAY.

palgrave

0

75.88

3.7

0

10.15

8.8

11.73

1

1.6

QUADRUPLE WITCHING DAY

A single business day when INDEX FUTURES, index OPTIONS, individual EQUITY options and SINGLE STOCK FUTURES all settle simultaneously, which occurs once each quarter (i.e., the third Friday in March, June, September, and December). There is evidence to indicate that volume and VOLATILITY increase during these days as market participants rebalance their positions. See also TRIPLE WITCHING DAY.

palgrave

0

34.97

13.2

14.1

15.14

15.7

9.77

13.333333

13.93

QUALIFIED INSTITUTIONAL BUYER

An INSTITUTIONAL INVESTOR that is authorized to purchase and sell to other QIBs and DEALERS PRIVATE PLACEMENTS and other SECURITIES that have not been floated in the public markets. The QIB resale mechanism injects additional LIQUIDITY into otherwise UNMARKETABLE SECURITIES. In the United States, aSECURITIES AND EXCHANGE COMMISSION SAFE HARBOR, RULE 144A, allows QIB resales provided that the number of QIBs and the minimum size of their participation are specified in the selling documents or private place- ment agreement.

palgrave

0

27.86

15.9

16.3

15.38

18.4

11.14

18.5

17.61

QUANGO

See QUASI AUTONOMOUS NONGOVERNMENTAL ORGANIZATION.

palgrave

0

-52.05

21.8

0

30.48

24.4

16.52

4.5

26

QUANTITATIVE EASING

A form of MONETARY POLICY where govern- ment authorities purchase GOVERNMENT SECURITIES from the open market, thereby increasing MONEY SUPPLY. This policy tends to be enacted when fur- ther easing is required but INTEREST RATES are already near 0% and cannot be reduced further.

palgrave

0

40.69

13.1

0

12.88

14.7

11.19

15.5

15.16

QUANTITY THEORY OF MONEY

An economic theory put forth by philoso- pher David Hume in the eighteenth century (and popularized by others since) which relates the level of prices with the amount of MONEY in the system. In particular, the following relationship is proposed:where M is the amount of money in circulation, V is the VELOCITY OF MONEY, P is the level of prices, Q is the real output of an economy.

palgrave

0

36.97

16.6

0

9.24

17.3

10.9

22.5

18.89

QUANTO

An OPTION that converts gains from an underlying DERIVATIVE into a target CURRENCY at a predetermined FOREIGN EXCHANGE RATE. The quanto allows an INVESTOR to participate in a foreign market/ASSET while protecting it from exchange rate RISK. Also known as GUARANTEED EXCHANGE RATE OPTION, QUANTITY ADJUSTED OPTION.

palgrave

0

30.16

13

13.6

14.73

13.2

10.8

11.166667

13.94

QUANTO SWAP

See DIFFERENTIAL SWAP.

palgrave

0

34.59

9.2

0

11.15

11.5

14.31

1.5

14.53

QUASI ARBITRAGE

Any ARBITRAGE strategy that makes use of internal, rather than external or borrowed, funds. See also PURE ARBITRAGE.

palgrave

0

53.88

8

0

11.57

9

10.22

6

12.49

(QUANGO)

A semigovernmental organization that is financed by, and fea- tures specific authorities that have been devolved from, a national or state government. See also GOVERNMENT-SPONSORED ENTERPRISE, QUASI AUTONOMOUS NONGOVERNMENTAL ORGANIZATION.to include cash, MARKETABLE SECURITIES (e.g., FIXED INCOME SECURITIES, Q COMMON STOCK, PREFERRED STOCK) and ACCOUNTS RECEIVABLE. Thequick asset measure is precisely equal to CURRENT ASSETS less INVENTORY. See also QUICK RATIO.

palgrave

0

22.11

14

14.6

18.9

17.5

12.68

11.625

13.99

QUICK RATIO

A measure of a company’s ability to meet OBLIGATIONS that are coming due with its most LIQUID ASSETS, typically computed as:where QA is QUICK ASSETS and CL is CURRENT LIABILITIES.A quick ratio above 1.0 indicates that the company has sufficient CASH FLOW from maturing or saleable assets to meet its short-term OBLIGATIONS; a ratio below 1.0 suggests the possibility of LIQUIDITY RISK pressures. Since the quick ratio only includes truly liquid assets as a potential source of cash, it is a more con- servative measure than the CURRENT RATIO. Also known as LIQUID RATIO.

palgrave

0

39.71

15.5

15.9

12.02

18.1

9.89

20.666667

18.05

QUIET PERIOD

The period of time during which a company in the process of registering a NEW ISSUE of SECURITIES is prohibited from releasing any public relations material or other sensitive information.

palgrave

0

7.19

19.7

0

13.88

18.5

10.91

25

24

QUOTA

An allotment or maximum amount; in the context of TRADE it relates to the specific amount of a good or COMMODITY that can be IMPORTED orEXPORTED.

palgrave

0

45.09

13.4

0

9.35

13.3

9.78

19

19.63

QUOTA SHARE

In REINSURANCE, a PROPORTIONAL AGREEMENT where an INSURER and REINSURER agree to split PREMIUMS, RISKS, losses, and LOSS ADJUSTMENT EXPENSES as a fixed percentage of the policy limit rather than a specific monetary amount. See also SURPLUS SHARE.

palgrave

0

43.73

11.9

0

13.69

14

12.06

15

19.18

QUOTATION

(1) An estimate of the cost of a particular service or coverage, as in INSURANCE. (2) An indication of the price of a SECURITY or other ASSET. Also known as QUOTE. (2) See also FIRM QUOTE, INDICATIVE QUOTE.

palgrave

0

52.19

10.7

0

6.67

9

9.57

13

14.97

QUOTE

See QUOTATION.

palgrave

0

35.61

8.8

0

4.2

10.2

11.63

1

20.8

QUOTE-DRIVEN MARKET

A marketplace where DEALERS or MARKET MAKERS give prices to BROKERS or TRADERS, who can then buy or sell. Prices are typically adjusted to reflect ORDER flow and SUPPLY and DEMAND forces. Institutional OVER-THE-COUNTER markets are often quote driven. See alsoDEALER MARKET, ORDER-DRIVEN MARKET.

palgrave

0

51.85

8.8

10.7

13.44

10.9

9.92

6.25

8.95

QUOTED SPREAD

The difference between the BID and the OFFER before a transaction occurs; the quoted spread may be a FIRM QUOTE or an INDICATIVE QUOTE.

palgrave

0

55.58

11.5

0

9.58

12.6

8.77

15

12.93

R-SQUARED

See COEFFICIENT OF DETERMINATION.

palgrave

0

-34.11

19

0

18.85

15.9

11.73

3

21.6

RAIDER

A hostile acquirer that attempts to purchase another com-pany, often to engage in ASSET STRIPPING or to receive GREENMAIL pay-ments. Although raiders were especially active during the HOSTILE TAKEOVERphase of the 1980s, they still exist.

palgrave

0

45.25

11.3

0

15.08

14.6

12.63

10.75

9.29

RAINBOW OPTION

See MULTI-INDEX OPTION.

palgrave

0

9.21

12.7

0

11.15

13

19.58

1.5

1.2

RAINMAKER

A financial services professional that is capable ofgenerating a significant amount of new business for an employing BANK orINVESTMENT BANK. The rainmaker generally refers to bankers that are cap-able of winning MANDATES to arrange NEW ISSUES or CORPORATE FINANCEtransactions, but can also apply to institutional salespeople, BROKERS, or trad-ers that are extremely successful in their respective areas.

palgrave

0

17.17

17.9

0

17.58

21.5

12.53

22.75

22.63

RALLY

A rise in the price of a SECURITY or market, which is seen as aBULLISH signal. A rally may be of short or long duration, depending on funda-mental and technical factors. See also RELIEF RALLY.

palgrave

0

59.6

7.9

10.5

6.71

5.6

9.18

6.5

9.25

RAMPING

The process of trying to push up the value of a STOCK orother SECURITY through a combination of short-term buying and spreadingof positive news, with the aim of trying to secure a short-term price rise so thatan existing LONG POSITION can be sold at a profit.

palgrave

0

33.25

20.1

0

10.11

23.5

10.38

28

22.75

RANDOM VARIABLE

An event or observation with an uncertain outcome;a random variable may be discrete (appearing at specified time intervals) orcontinuous (appearing at any time), and it may be limited to a defined value orcarry any value. Samplings of random variables are often used in SIMULATIONprocesses that generate ASSET prices or distributions.

palgrave

0

20.72

16.6

0

15.15

17.9

11.51

18.5

18.8

RANDOM WALK

A financial theory indicating that ASSET prices move inperiod associated with the asset observations, the greater the possible dispersionof prices. More formally, the random walk is a STOCHASTIC PROCESS whereasset prices are RANDOM VARIABLES, with each price increment independentand identically distributed. See also EFFICIENT MARKET HYPOTHESIS.Additional references: Cootner (1964); Samuelson (1965).

palgrave

0

11.92

15.8

17.1

20.99

19.6

13.15

14.5

20.92

RANGE FLOATER

See RANGE FLOATING RATE NOTE.the INVESTOR with an enhanced COUPON if the FLOATING RATE referencetrades within a predefined range; for every day the reference falls outside theband the investor loses one day’s interest. The security is effectively a standardFRN with a strip of embedded BINARY OPTIONS. Also known as ACCRUALNOTE, DAY COUNT NOTE, RANGE FLOATER. See also CAPPED FLOATING RATE NOTE, INVERSE FLOATING RATE NOTE, PERPETUAL FLOATING RATE NOTE, RANGE KNOCK-OUT FLOATING RATE NOTE.

palgrave

0

52.7

10.5

12.6

14.39

14.3

9.89

12

13.35

RANGE FORWARD

See ZERO COST COLLAR.

palgrave

0

75.88

3.7

0

1.45

1.8

7.78

1

1.6

RANGE KNOCK-OUT FLOATER

See RANGE KNOCK-OUT FLOATING RATE NOTE.

palgrave

0

90.77

2.1

0

10.08

8.3

9.2

2

2.4

RAROC

See RISK-ADJUSTED RETURN ON CAPITAL.

palgrave

0

32.56

10

0

13.08

11.2

10.2

3.5

10

RATCHET OPTION

See CLIQUET OPTION.

palgrave

0

59.97

5.6

0

5.35

6.8

14.31

0.5

1.2

RATE

See INTEREST .

palgrave

0

-6.7

14.7

0

1.3

7.8

11.63

1.5

20.8

RATE LOCK

A mechanism that guarantees a BORROWER an underlying INTEREST RATE on a LOAN for a period ranging from 30 to 90 days. The rate lock ensures the borrower faces a known financing cost, as long as the loan is concluded during the effective period. Also known as LOCK-IN PROVISION. See also DROP LOCK, SPREAD LOCK.

palgrave

0

65.93

7.5

13

8.4

7.3

8.91

8.875

12.79

RATE MAKING

In INSURANCE, the process of establishing PREMIUM rates so that they adequately cover EXPECTED LOSSES and are reasonable and non- discriminatory. When supplemented by relevant LOAD factors, the INSURER obtains the FAIR PREMIUM that it charges INSUREDS. See also EXPENSE LOADING, PREMIUM LOADING, PURE PREMIUM.

palgrave

0

30.87

12.7

15

15.25

13.8

11.4

11.833333

14.89

RATE OF EXCHANGE

See FOREIGN EXCHANGE RATE.

palgrave

0

75.88

3.7

0

8.7

7.7

7.78

1

1.6

RATE OF INTEREST

See INTEREST RATE.

palgrave

0

59.97

5.6

0

3.43

5.2

9.05

1.5

14.53

RATE ON LINE

A measure of an INSURER’s or REINSURER’s gross profitabil- ity, generally calculated as:where Pr is PREMIUM and Line is the amount of the LINE provided by the insurer or reinsurer.The higher the rate on line, the more gross profit the insurer earns.

palgrave

0

28.85

19.7

0

11.51

22.9

11.36

30

24.42

RATE-SENSITIVE ASSETS

ASSETS of a FINANCIAL INSTITUTION that are exposed to changes in INTEREST RATES (e.g., FIXED INCOME INVESTMENTS,REVERSE REPURCHASE AGREEMENTS, LOANS). Measurement of rate-sensi- tive assets is an essential component of GAP MANAGEMENT; by determining sensitivity to changes in interest rates, a financial institution can manage its exposure to DIRECTIONAL RISK, CURVE RISK, and REPRICING RISK. See alsoASSET MANAGEMENT, RATE-SENSITIVE LIABILITIES.

palgrave

0

17.34

15.8

18.2

18.39

18.9

13.05

17

18.67

RATE-SENSITIVE LIABILITIES

LIABILITIES of a FINANCIAL INSTITUTION that are exposed to changes in INTEREST RATES (e.g., DEPOSITS, REPURCHASE AGREEMENTS, BONDS). Measurement of rate-sensitive liabilities is an essential component of GAP MANAGEMENT; by determining sensitivity to changes in interest rates, a financial institution can manage its exposure to DIRECTIONAL RISK, CURVE RISK, and REPRICING RISK. See also ASSET MANAGEMENT, RATE-SENSITIVE ASSETS.

palgrave

0

18.05

15.5

17.9

18.04

18.3

12.22

16.333333

17.38

RATIO ANALYSIS

A financial analysis technique used by INVESTMENT ANALYSIS and CREDIT ANALYSTS that uses ACCOUNTING information from a company’s FINANCIAL STATEMENTS to compute relative and abso- lute strength/weakness in key areas such as profitability, activity, liquidity, LEVERAGE, and SOLVENCY.

palgrave

0

-9.4

24

0

19.79

28

14.66

34

27.83

RATIO SWAP

See POWER SWAP.

palgrave

0

93.81

0.9

0

-2.38

0.5

9.05

0.5

1.2

RATIO VERTICAL SPREAD

An OPTION SPREAD that is designed to gener- ate profits from VOLATILITY. Ratio vertical spreads are created through the purchase of a smaller quantity of closer-to-the-money PUT OPTIONS or CALL OPTIONS and the sale of a larger quantity of farther-from-the-money puts or calls. See also BACKSPREAD.

palgrave

0

55.95

9.3

11.9

12.64

12

10.57

9

9.6

RATIO WRITING

An OPTION position where an option writer sells a com- bination of COVERED OPTIONS and NAKED OPTIONS, in specific quantities or ratios. The RISKS associated with the strategy are lower than they are with a pure naked option strategy, but higher than on a covered option approach.

palgrave

0

47.62

12.5

0

11.15

13.7

10.85

15.25

14.51

RATIONALIZATION

A process undertaken by a company to reduce its oper- ations in order to improve efficiencies and lower costs. Rationalization may involve the disposal of certain business lines or operating SUBSIDIARIES, the closure of production facilities and/or the dismissal of some amount of employ- ees. See also DOWNSIZING, RIGHTSIZING.

palgrave

0

38.01

12

13.6

14.5

13.5

11.53

11.5

13.87

RAW MATERIAL INVENTORY

A class of INVENTORY held by a com- pany that includes all materials and resources used in the production ofgoods intended for sale. See also FINISHED GOODS INVENTORY, WORK-IN-PROCESS INVENTORY.

palgrave

0

39.33

11.5

0

12.87

12

10.17

11

11.33

RBA

See RESERVE BANK OF AUSTRALIA.

palgrave

0

83.32

2.9

0

7.28

5.6

10.2

1.5

2

REACQUIRED STOCK

See TREASURY STOCK.

palgrave

0

93.81

0.9

0

5.35

6.8

9.05

0.5

1.2

REAL EXCHANGE RATE

A FOREIGN EXCHANGE RATE that has been cali- brated to take account of INFLATION.

palgrave

0

74.19

6.4

0

9.04

8.1

8.84

7

8.46

REAL INTEREST RATE

The core level of INTEREST RATES, excluding the effects of INFLATION, typically computed as:=11 + rinfwhere rreal is the real rate, rnom is the nominal rate, and rinf is the inflation rate. See also NOMINAL INTEREST RATE, REAL YIELD.

palgrave

0

43.73

11.9

0

10.97

12.2

10.81

14.25

13.92

REAL MONEY ACCOUNT

See REAL MONEY INVESTOR.

palgrave

0

50.5

7.2

0

5.8

5.3

7.78

1

1.6

REAL OPTION

The right, but not the obligation, a company has to enter into a new CAPITAL INVESTMENT or to exit an existing capital investment. The general concept is based on the framework developed for financial OPTIONS, though real option decisions tend to be much more complex and opaque. The associated VALUATION process is used as an alternativeor supplement to more traditional CAPITAL BUDGETING and DISCOUNTED CASH FLOW exercises. In general, real options cannot be traded between par- ties, though some real options can be sold to other parties.

palgrave

0

32.43

14.2

16.2

12.36

14.1

9.62

16.125

15.16

REAL OPTION ANALYSIS

See REAL OPTION VALUATION.

palgrave

0

8.2

13.1

0

8.7

7.7

11.73

2

11.6

REAL OPTION VALUATION

A framework used to evaluate REAL OPTIONS that attempts to factor in the multiplicity of decisions that exist in a typical INVESTMENT project (e.g., initial investment, expansion, abandonment, deferral of funding, and so forth). In order to take account of these multiple decisions, their associated uncertainties and an array of EXERCISE possibil- ities, the real option valuation framework employs RISK-adjusted probabilities and LATTICE MODELS to generate a quantitative result. Also known as REAL OPTION ANALYSIS.

palgrave

0

12.26

17.8

18.2

16.02

18.9

12.67

19.5

20.13

REAL RETURN BOND

In Canada, an INFLATION-LINKED SECURITY.

palgrave

0

-1.29

14.7

0

16.56

15

16.52

3.5

18

REAL YIELD

The YIELD on a SECURITY that has been calibrated to take account of INFLATION. Real yield is lower than the computed or nominal yield in an inflationary environment.

palgrave

0

40.35

11.1

0

10.32

8.8

9.41

10.5

15.6

REALIZED GAIN

Gains on an ASSET (resulting from a positive change in valuation) that have been crystallized for ACCOUNTING purposes on the INCOME STATEMENT. A gain is realized through disposal of the asset. See also REALIZED LOSS, UNREALIZED PROFIT.

palgrave

0

42.07

10.4

13.6

12.11

10.1

9.79

8.5

14.65

REALIZED LOSS

Losses on an ASSET (resulting from a negative change in valuation) that have been crystallized for ACCOUNTING purposes on the INCOME STATEMENT. A loss is realized through disposal of the asset. See alsoREALIZED GAIN, UNREALIZED LOSS.

palgrave

0

42.38

10.3

13.6

12.75

10.5

9.93

8.333333

15.91

REALIZED SPREAD

The difference between the weighted average of the BIDS and OFFERS of executed SECURITIES transactions over a specific period of time. See also EFFECTIVE SPREAD, QUOTED SPREAD.

palgrave

0

32.39

12.1

0

13.68

11.5

10.74

10.75

15.77

REBALANCING

(1) The process of adjusting an INVESTMENT PORTFOLIO by adding or removing certain SECURITIES or ASSETS to reflect a change in the market. (2)The process of adjusting an existing HEDGE after a market move in order to preserve its efficacy in neutralizing RISK.

palgrave

0

19.37

21.2

0

12.2

23.9

12.01

30.5

24.64

REBATE

(1) A refund, provided by a company to its customers, related to the purchase of specified goods or services (2) A refund provided by an INTERMEDIARY to a client executing a TRADE.

palgrave

0

30.54

17

0

9.06

16.5

11.14

23

19.05

RECEIVABLE

See ACCOUNTS .

palgrave

0

35.61

8.8

0

1.3

7.8

11.63

0.5

0.8

RECEIVER

A party named by a BANKRUPTCY court to act as AGENT for a bankrupt DEBTOR while maintaining ASSETS for the benefit of CREDITORS. A receiver may be given different levels of operating discretion by the courts, from managing the business of the company in bankruptcy to simply deal- ing with the disposal of property. Also known as ADMINISTRATOR. See alsoRECEIVERSHIP.

palgrave

0

42.72

12.3

15.9

11.84

12.7

10.16

15

16

RECEIVER EXTENDIBLE SWAP

An EXTENDIBLE SWAP that is formed from a combination of a fixed receiver SWAP and a RECEIVER SWAPTION.

palgrave

0

61.67

9.1

0

9.51

9.8

10.67

12

11.64

RECEIVER SWAPTION

A SWAPTION granting the buyer the right to enter into an OVER-THE-COUNTER INTEREST RATE SWAP to receive FIXED RATES and pay FLOATING RATES. The buyer will to EXERCISE the receiver swaption as floating rates fall below a particular STRIKE PRICE. Also known as CALL SWAPTION. See also PAYER SWAPTION.

palgrave

0

58.99

8.1

9.5

10.72

8.7

8.44

6.375

8.19

RECEIVERSHIP

A state where a company has filed for BANKRUPTCY and is being overseen by a RECEIVER until courts decide on LIQUIDATION orREORGANIZATION.

palgrave

0

32.22

14.2

0

13.05

14.4

9.75

16

16.07

RECESSION

A period of economic contraction within a national ECONOMY as part of the ongoing BUSINESS CYCLE. A recession, which may be defined as two or more consecutive quarters of falling output (as measured through GROSS DOMESTIC PRODUCT), may feature falling INVESTMENT and rising UNEMPLOYMENT. See also DEPRESSION.

palgrave

0

38.62

11.8

14.6

13.92

12.6

11.81

11.833333

16.49

RECIPROCAL EXCHANGE

An unincorporated association where INSUREDS amalgamate their RISKS in order to insure one another; existing membersactively attempt to recruit new members to spread risks even more widely. The affairs of the reciprocal exchange, including collection of PREMIUMS, adjustment of losses, and payment of CLAIMS, are often administered by an ATTORNEY-IN-FACT. Also known as RECIPROCAL INSURANCE EXCHANGE.

palgrave

0

18.65

15.3

15.9

17.4

16.9

11.05

14.333333

16.77

RECIPROCAL RATE

The inverse of the commonly quoted FOREIGN EXCHANGE RATE for a given CURRENCY pair. While the foreign exchange markets typically quote in terms of currency per US dollar or US dollar per currency, the reciprocal rate denominates the same quote in inverse terms. See also AMERICAN TERMS, EUROPEAN TERMS.

palgrave

0

46.47

10.8

13

11.89

11.1

8.63

11.166667

11.42

RECIPROCITY

In general, the exchange between two parties of certain actions or services for receipt of substantial similar actions or services. In BANKING reciprocity is commonly encountered in CAPITAL-raising, DEPOSIT, and UNDERWRITING activities.

palgrave

0

12.94

15.4

0

18.5

16.8

10.84

12.5

15.15

RECOMBINING TREE

See LATTICE MODEL.

palgrave

0

59.97

5.6

0

3.43

5.2

14.31

0.5

1.2

RECONCILIATION

In ACCOUNTING the process of comparing DEBITS and CREDITS on transactions flowing through a company’s ledgers to ensure proper treatment and balance. Reconciliation may be carried out on a formal basis every week, month, or quarter.

palgrave

0

44.75

11.5

0

13.51

13.3

11.55

11.5

12.76

RECOUPONING

The process of MARKING-TO-MARKET and settling a PORTFOLIO of DERIVATIVES in order to reduce ACTUAL EXPOSURE between COUNTERPARTIES. A net cash SETTLEMENT is paid to the party holding the contracts with current value and the derivatives are then rewritten, or recou- poned, at current market levels. The process is then repeated at a future settle- ment period.

palgrave

0

43.73

11.9

13.6

12.76

13.2

10.12

12.833333

12.51