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840 terms · page 28 of 35
Retest
Technical Analysis & Chart Patterns
qualitative
A return of price to a level it has recently broken through, to see whether that level now holds from the other side.
Test: price returns to within a small band of the broken level after the initial breach
Return on Assets
Fundamental Analysis & Valuation
%
Net profit as a percentage of total assets, measuring how much profit the asset base generates regardless of funding.
ROA = Net Profit / Average Total Assets x 100
Return on Capital Employed
Fundamental Analysis & Valuation
%
Operating profit as a percentage of the total capital, both equity and debt, used to generate it.
ROCE = Operating Profit (EBIT) / (Shareholders' Equity + Total Debt) x 100
Return on Equity
Fundamental Analysis & Valuation
%
Net profit expressed as a percentage of shareholders' equity, measuring what the business earns on the owners' capital.
ROE = Net Profit Attributable to Shareholders / Average Shareholders' Equity x 100
Return on Invested Capital
Fundamental Analysis & Valuation
%
After-tax operating profit as a percentage of the capital actually invested in operations, excluding surplus cash.
ROIC = Net Operating Profit After Tax / (Total Debt + Equity - Cash) x 100
Revenue
Financial Statements & Accounting
₹ crore
The income a company earns from its principal business activities during a period, before any costs are deducted.
Revenue = Units Sold x Average Selling Price, summed across products and services
Revenue Deficit
Economy, Macro & Market Cycles
%
The excess of the government's revenue expenditure over its revenue receipts.
Revenue Deficit = Revenue Expenditure - Revenue Receipts
Revenue Growth
Fundamental Analysis & Valuation
%
The rate at which a company's sales increase from one period to the next.
Revenue Growth = (Current Period Revenue - Prior Period Revenue) / Prior Period Revenue x 100
Revenue Recognition
Financial Statements & Accounting
qualitative
The accounting rules determining when and how much revenue a company may record from a contract with a customer.
Test: recognise revenue when control of the goods or services transfers to the customer, in the amount expected to be received
Reverse Repo Rate
Economy, Macro & Market Cycles
%
The rate at which the Reserve Bank borrows from commercial banks, absorbing surplus liquidity from the system.
Test: it is the rate the central bank pays banks for parking surplus funds with it
Reverse Stock Split
Corporate Actions, Dividends & Governance
shares
A consolidation of several shares into one, raising the face value and the price proportionally.
New Share Count = Old Count / Consolidation Ratio; Adjusted Price = Old Price x Consolidation Ratio
Rho
Derivatives, Futures & Options
₹
The change in an option's price for a one-percentage-point change in the risk-free interest rate.
Rho = Change in Option Price / Change in Risk-Free Rate (per 1 percentage point)
Rights Issue
Corporate Actions, Dividends & Governance
₹
An offer of new shares to existing shareholders in proportion to their holdings, usually at a discount to the market price.
Theoretical Ex-Rights Price = (Existing Shares x Cum-Rights Price + New Shares x Issue Price) / Total Shares After Issue
Rising Wedge
Technical Analysis & Chart Patterns
qualitative
A formation in which both boundaries slope upward but converge, with the lower boundary rising more steeply than the upper.
Test: higher highs and higher lows, with the line through the lows rising faster than the line through the highs
Risk
Risk & Portfolio Management
qualitative
The possibility that an investment's actual outcome differs from what was expected, including permanent loss of capital.
Test: the range of possible outcomes is wide, and at least some of those outcomes are materially worse than the expected one
Risk Aversion
Market Psychology & Behavioural Finance
qualitative
The preference for a certain outcome over an uncertain one with the same expected value.
Test: the certainty equivalent accepted is less than the gamble's expected value
Risk Capacity
Risk & Portfolio Management
%
How much loss an investor can absorb financially without their plans failing.
Test: the loss that could be sustained while still meeting known obligations from other resources and income
Risk Management
Risk & Portfolio Management
qualitative
The practice of identifying, measuring and limiting the losses a portfolio can suffer.
Test: a maximum acceptable loss is defined in advance, and position sizes are set so that it cannot be exceeded in normal conditions
Risk of Ruin
Risk & Portfolio Management
%
The probability that a series of losses reduces capital below the level needed to continue.
Rises with the fraction of capital risked per position, with the loss rate, and falls with the ratio of average win to average loss
Risk Tolerance
Risk & Portfolio Management
%
How much volatility and loss an investor is emotionally willing to endure without abandoning their plan.
Test: the largest decline the investor would hold through without selling, judged by past behaviour rather than by stated intention
Risk-Free Rate
Risk & Portfolio Management
%
The return available on an investment considered to carry no default risk, used as the baseline for all other returns.
Test: the instrument is a sovereign obligation in the domestic currency, with maturity matching the horizon being analysed
Risk-Reward Ratio
Risk & Portfolio Management
ratio (x, times)
The ratio of a position's intended gain to the loss that would be taken if the thesis fails.
Risk-Reward Ratio = (Target Price - Entry Price) / (Entry Price - Stop Price)
Risk-Seeking Behaviour
Market Psychology & Behavioural Finance
qualitative
Preferring an uncertain outcome to a certain one of the same expected value, typically when facing losses.
Test: the gamble is preferred to a certain outcome of equal or higher expected value, usually in the loss domain
Riskometer
Funds, ETFs & Index Investing
qualitative
SEBI's mandated six-level graphic indicating a mutual fund scheme's risk, disclosed monthly.
Levels: Low, Low to Moderate, Moderate, Moderately High, High, Very High, computed from the portfolio's own risk characteristics