Category: R

The concept that the level of risk can be reduced by combining uncorrelated risks. AKA pooling.

Gaining capital by purchasing and holding longterm bonds in the event of declining yields. AKA riding the curve.

Restructuring a company to create more equity and reduce debt. The company may be solvent or filing for bankruptcy. Or reorganizing the voting abilities of stock. AKA deleveraging. Refer to dual class

When an asset is repurchased by a lender the borrower must pay this interest rate. It is usually lower than before since it is secured by collateral.

The total, unadjusted return generated for shareholders by a firm during an identified period of time. Refer to risk adjusted return on capital.

When a holding is at its highest price and a firm will benefit from selling it.

The higher payments made to a firm that invests in high risk ventures with the possibility of default. AKA risk margin. Refer to premium.

A risk reducing strategy that involves closing out nearby or next nearby derivative contracts and then repurchasing to push out the maturity date. AKA stack and roll. Refer to strip hedge.

When insured parties group together to protect one another. New members are sought to prevent loss. AKA recriprocal insurance exchange.

The chance that an asset will be reinvested at a less than favorable rate. This can cause great loss. AKA refinancing risk or reinvestment risk. Refer to negative gap, positive gap, ratesensitive

A formula used to determine profit made by an investment or to compare several investments to determine which ones generate the most capital.

Giving existing shareholders an opportunity to purchase new stock at current prices with the remaining available stock being sold in the open market at the future rate. AKA privileged subscription issue and

The process of estimating the impact of financial and operating risks on a firm using formulas, statistics, and actuarial techniques. Refer to risk identification and risk management.

When a repurchase agreement, revolving credit facility, evergreen deposit, commercial paper, account payable, or not is renewed or reissued as it comes due providing continued funding for the debtor.

a trust wherein the employee is not taxed because the plan’s assets can be claimed by creditors. This name is used because the first of these type of trusts was set up

Cancelling insurance due to fraud or misrepresentation.

Rebuying securities for cash value. Essentially money is borrowed, collateralized, and a repo rate is charged. AKA repo. Refer to dollar role, general collateral, gensaki, open repo, overnight repo, special, and term

The time a stock currency or commodity is held in order to produce profit when sold.

Named to illustrate an attempt of fleeing to Rio if this strategy fails, it is an attempt to reverse losses by executing a large and risky trade.

The attempt to reduce financial and operating risk by withdrawal from high risk ventures of risk pooling resulting in diversification. Refer to loss control and loss financing.