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840 terms · page 27 of 35

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Economy, Macro & Market Cycles

Real GDP

Gross domestic product adjusted to remove the effect of price changes, so it measures output rather than value.

Real GDP = Nominal GDP / GDP Deflator x 100 ₹ crore Economy, Macro & Market Cycles

Real Return

The return on an investment after adjusting for inflation, measuring the gain in purchasing power.

Real Return = (1 + Nominal Return) / (1 + Inflation Rate) - 1 % Market Basics & Instruments

Realised Gain

The profit that is locked in once a position has actually been sold and settled.

Realised Gain = (Actual Sale Price - Purchase Price) x Quantity Sold - Transaction Costs ₹ Risk & Portfolio Management

Rebalancing

Restoring a portfolio to its target weights by selling what has grown beyond them and buying what has fallen below.

Test: weights are returned to target on a schedule, or whenever a weight drifts beyond a stated tolerance band % Market Psychology & Behavioural Finance

Recency Bias

The tendency to weight recent events more heavily than older ones when forming expectations.

Test: expectations track the most recent period's outcomes rather than the full available history qualitative Economy, Macro & Market Cycles

Recession

A significant, broad-based decline in economic activity lasting more than a few months.

Common working test: two consecutive quarters of negative real GDP growth qualitative Corporate Actions, Dividends & Governance

Record Date

The date on which a company checks its register to determine who is entitled to a corporate action.

Test: the shareholder's name appears in the register of members or the depository records at the end of the record date qualitative Economy, Macro & Market Cycles

Recovery

The phase following a trough in which activity begins rising again toward and past its previous peak.

Test: real GDP is rising from a trough, though it may still be below the prior peak qualitative Technical Analysis & Chart Patterns

Rectangle Pattern

A consolidation bounded by roughly horizontal support and resistance, with price oscillating between them.

Test: two or more highs at approximately one level and two or more lows at approximately another, with no convergence qualitative Indian Market, Regulation & Taxation

Red Herring Prospectus

The offer document filed before an IPO containing all details except the final issue price and size.

Test: the document is filed with the registrar and contains complete disclosure other than the final price and number of shares qualitative Market Psychology & Behavioural Finance

Regret Aversion

Avoiding decisions because of the anticipated pain of regret if they turn out badly.

Test: the choice minimises anticipated regret rather than maximising expected outcome qualitative Funds, ETFs & Index Investing

Regular Plan

A version of a mutual fund scheme bought through a distributor, whose commission is embedded in a higher expense ratio.

Regular Plan Expense Ratio = Direct Plan Expense Ratio + Distributor Commission % Bonds & Fixed Income

Reinvestment Risk

The risk that coupons or maturing principal must be reinvested at rates lower than the original investment earned.

Test: the realised return falls below the original yield to maturity because intermediate cash flows were reinvested at lower rates % Corporate Actions, Dividends & Governance

Related Party Transaction

A transaction between a company and a person or entity connected to it, such as a promoter, director or group company.

Test: the counterparty meets the definition of a related party, requiring disclosure and, above thresholds, audit committee and shareholder approval qualitative Indicators & Oscillators

Relative Strength

The performance of one security measured against another security or an index over the same period.

Relative Strength = Security Price / Benchmark Price, tracked over time; or Security Return - Benchmark Return % Indicators & Oscillators

Relative Strength Index

An oscillator bounded between 0 and 100 that compares the average size of recent gains with the average size of recent losses.

RSI = 100 - 100 / (1 + RS), where RS = Average Gain over n periods / Average Loss over n periods ratio (x, times) Fundamental Analysis & Valuation

Relative Valuation

Valuing a company by comparing its multiples with those of similar companies or with its own history.

Implied Value = Peer Group Median Multiple x Company's Corresponding Financial Metric ₹ crore Economy, Macro & Market Cycles

Repo Rate

The rate at which the Reserve Bank lends short-term funds to commercial banks against government securities.

Test: it is the policy rate at which banks borrow overnight from the central bank under the liquidity adjustment facility % Market Psychology & Behavioural Finance

Representativeness Heuristic

Judging probability by how closely something resembles a mental prototype, rather than by statistical likelihood.

Test: the judgement follows similarity to a stereotype and ignores how common that category actually is qualitative Indian Market, Regulation & Taxation

Research Analyst

A SEBI-registered person or entity that publishes research reports and recommendations on securities.

Test: the person holds a SEBI registration as a research analyst and complies with the disclosure and conduct requirements for published research qualitative Indian Market, Regulation & Taxation

Reserve Bank of India

India's central bank, responsible for monetary policy, currency, banking regulation and the government securities market.

Test: the matter concerns monetary policy, banking regulation, payment systems, foreign exchange or government debt management qualitative Financial Statements & Accounting

Reserves and Surplus

The accumulated profits retained in the business plus other reserves such as securities premium and revaluation reserve.

Reserves and Surplus = Retained Earnings + Securities Premium + Other Reserves ₹ crore Technical Analysis & Chart Patterns

Resistance

A price level at which selling has previously been sufficient to halt an advance.

Test: price has reversed downward from approximately this level on at least two prior occasions ₹ Financial Statements & Accounting

Retained Earnings

Cumulative profits a company has kept rather than distributed as dividends, carried forward within reserves.

Closing Retained Earnings = Opening Retained Earnings + Net Profit - Dividends Paid ₹ crore