Category: R

A safe investment model used to compare different risks of investment opportunities to determine the best choices a firm should make. Refer to discount rate and risk premium.

Assets in a bank exposed to interest rate changes. Refer to asset liability management and ratesensitive liabilities.

Reactivating insurance cancelled due to nonpayment. The insurance company has the right to charge a higher premium.

An insurance policy that covers existing and incurred but not yet reported losses up to a dollar amount. Refer to loss portfolio transfer and retrospective finite policy.

When a lender gives monthly payments to a borrower using their property equity. This is usually done by elderly homeowners resulting in the borrower eventually owning the home.

A decision guided by cost/benefit analysis made by a firm to control, retain, eliminate, or expand its risks. Refer to risk identification, risk monitoring, and risk quantification.

Presentations organized by a firm introducing a new issue of securities to possible investors. AKA dog and pony show.

Liabilities of a bank that are exposed to interest rate changes. Refer to asset liability management and ratesensitive asset.

A transaction between a related entity and a company.

An insurance policy structured as adverse development cover loss portfolio transfer, and retrospective aggregate loss cover allowing management of existing liabilities and losses. AKA postfunded policy. Refer to prospective finite policy.

When a firm repos securities from a party that pays a finance charge in agreement to sell them at a higher price at a predetermined date in the future. AKA reverse, resale,

Identifying, quantifying, managing, and monitoring financial and operating risk. Refer to risk identification, risk management, risk monitoring, and risk quantification.

The closing of an option to obtain a lower strike price. Refer to roll forward and roll up.

An option spread that creates profit from volatile circumstances. A small amount of closertothemoney options are bought than fartherfromthemoney options. Refer to backspread.

When a loan is rewritten to prevent foreclosure. This can be an extension, lowered interest, or a change in repayment schedule. AKA rescheduling or soft loan.

The adjustment of insurance premium rates based on the losses incurred over the current year.

When a firm reduces its outstanding shares in an attempt to increase their value. They offer half the amount of shares at twice the price per share making the stock appear more

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.