Category: R

Loss control, loss financing, and risk reduction methods used to manage risks.

The closing of an option to obtain a longer maturity term. Refer to roll down and roll up.

Whan an option writer sells both naked and covered options. They are sold in specific amounts and ratios. This is safer than a pure naked option position.

A licensed insurer who makes accounts available to companies who prefer self insurance. Refer to agency captive, captive, group captive, protected cell company, pure captive, senior captive, and sister captive.

The legal review focusing on the board of directors actions just prior to the financial difficulties that is performed by external parties as a result of a declaration of bankruptcy.

When a holder sells high coupon securities back with the understanding that at maturity, they will be able to repurchase these securities.

The tracking and reporting of exposures to risk to external stakeholders. Refer to risk identification, risk management, and risk quantification.

The closing of an option to obtain a higher strike price. Refer to roll down and roll forward.

The difference between average bids and offers over a period of time. Refer to effective and quoted spreads.

The second sale offering of securities under the existing issue. This helps raise benchmarks by grouping more liquidity in a smaller amount of issues.

An insurance policy with a premium that is based on the previous year

The purchase of goods or services by a bank or investment bank in exchange for lucrative feebased new issue or corporate finance mandates. Refer to tying.

A firms formal take on corporate goals, activities, and stakeholders expectations regarding risk activities. Refer to risk tolerance.

When a variable rate of interest is exchanged for a fixed rate of interest to accommodate flexibility between two terms experiencing different financial needs. Refer to variable principal swap.

A swap exchanging realized and implied volatility for a market reference. This is common for equith and foreign exchange markets. Refer to variable swap.

When bankruptcy is files this occurs. The company is analyzed by trustee to liquidate assets and pay off claims. This is done before a court decides what to do with the company.

The ratio between the net income and average total assets measured during an identified period of time.

The relative change in the cost of an option making it a risk free rate holding all other variables constant. Refer to delta, gamma, theta, greeks, and vega.

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.