Business / Taxes Glossary

Return On Equity: Return on equity (ROE) measures how much a company earns within a specific period in relation to the amount that's invested in its common stock. It is calculated by dividing the company's ne . . . View Full Definition

Return On Investment: Your return on investment (ROI) is the profit you make on the sale of a security or other asset divided by the amount of your investment, expressed as an annual percentage rate. For example, . . . View Full Definition

Revenue: Revenue is the money you collect for providing a product or service. Revenue is different from earnings, which is what's left of your revenue after subtracting the costs of producing or deli . . . View Full Definition

Revenue Bond: Revenue bonds are municipal bonds issued to finance public projects, such as airports and roadways. The bonds are backed by revenue to be generated by the project. For example, if the constr . . . View Full Definition

Reverse Merger: In a reverse merger, a privately held company purchases a publicly held company and, as part of the new entity, becomes public without an initial public offering (IPO). It’s described as rev . . . View Full Definition

Reverse Mortgage: A reverse mortgage is a loan available to a homeowner 62 or older who may be eligible to borrow against the equity in his or her home. Generally with a reverse mortgage, you receive money fr . . . View Full Definition

Reverse Stock Split: If a company's stock is trading at a low price, the company may decide to reduce the number of existing shares and increase their price by consolidating the shares. For example, a 1-for-2 re . . . View Full Definition

Revocable Trust: A revocable trust is a living trust that can be modified or revoked by the grantor, or person who establishes the trust and transfers property to it. The trust can be a useful estate-plannin . . . View Full Definition

Revolving Credit: A revolving credit arrangement allows you to borrow up to your credit limit without having to reapply each time you need cash. As you repay the money you have borrowed, it is available to be . . . View Full Definition

Rider: A rider is a modification to an insurance policy that typically adds a new coverage or higher coverage in return for higher premiums. For example, you might add a rider to your life insuranc . . . View Full Definition

Rights Of Survivorship: If two or more people own property jointly with rights of survivorship and one of the owners should die, the deceased owner’s share of the property automatically passes to the surviving owne . . . View Full Definition

Rights Offering: In a rights offering, also known as a subscription right, a company offers existing shareholders the opportunity to buy additional shares of company stock in proportion to the number they al . . . View Full Definition

Risk: According to modern investment theory, the greater the risk you take in making an investment, the greater your return has the potential to be if the investment succeeds. For example, investi . . . View Full Definition

Risk Premium: A risk premium is one way to measure the risk you'd take in buying a specific investment. Some analysts define risk premium as the difference between the current risk-free return — defined a . . . View Full Definition

Risk Ratio: Some investors and financial analysts try to estimate the risk an investment poses by speculating on how much the investment is likely to increase in value as opposed to how much it could de . . . View Full Definition

Risk Tolerance: Risk tolerance is the extent to which you as an investor are comfortable with the risk of losing money on an investment. If you’re unwilling to take the chance that an investment that might . . . View Full Definition

Risk-Adjusted Performance: When you evaluate an investment's risk-adjusted performance, you aren't looking simply at its straight performance figures but at those figures in relation to how much risk you'd be taking t . . . View Full Definition

Risk-Free Return: When you buy a US Treasury bill that matures in 13 weeks, you're making a risk-free investment in the sense that there's virtually no chance of losing your principal (since the bill is backe . . . View Full Definition

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