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Date: Tuesday 13th 2008f May 2008 09:25:24 AM

Glossary
 

R
 

Raider:  An acquirer who takes over a company by submitting a hostile bid.

Our take: Raider bought undervalued companies and then try to sell it after fixing the companies up.

 

Rainbow Option: An option tied to two or more underlying assets.

Our take: For the option to be profitable, all the underlying security must move in the intended direction.
 

Random Walk Theory: A theory that states that past history cannot be used to predict future stock movement. Stock moves independent to each other in a randomly fashion. 

Our take: The believer of this theory believes that no one can outperform the market other than pure luck. Those that do, cannot do it for an extended period of time.
 

Rate of Return: The percentage gain or loss of an investment over a predetermined time line.

Our take: Rate of Return generally is expressed in term of a yearly return.
 
Razor - Razorblade Model: Selling one pair of goods at different profitability level. This follows the model of Gilette razor where the company prices its razor at a discount while making its profits from the sale of the razor blade. The razor cannot function without a razor blade. Therefore, this pricing strategy works for the benefit of the company.
Our take: Another example of this pricing model include: printer and the ink cartridge, video game console and the video game itself.
 
Reaganomics: Economic policies enforced by the 40th US President, Ronald Reagan.
Our take: Reaganomics believe that to stimulate economic growth, tax needs to be reduced. The extra money saved on tax will then trickle down to the rest of economy, initiating economic expansion.
 
Real Asset: Assets that can be physically identified such as machinery, gold, building etc.
Our take: During period of high inflation, people tends to hold real assets as it is expected not to lose its value. 
 
Real Economic Growth: The economic growth of a country adjusted for the rate of inflation.
Our take: Real Economic Growth is a more accurate look of economic growth since it is expressed at constant dollars which excludes inflation.
 
Real Estate : Land plus anything built on it, including building.
Our take: The value of a real estate depends on the local surroundings such as crime rate, vehicle traffics, strategic location and so forth.
 
Real Income: The income of individual after taking into effects inflation rate.
Our take: Another word for real income is real purchasing power.
 
Real Interest Rate: The nominal interest rate deducted by the inflation rate.
Our take: In other word, real interest rate is the increase in purchasing power from an investment. 
 
Realized Gain: A gain from selling an asset that was bought at a lower price.
Our take: In other word, investors decide to cash in on their investments.
 
Receivables : An obligation owed to the company by customers.
Our take: When selling a product, company can either receive cash or receivables. Receivables will then be converted into cash once customers make payment.
 
Recurring Revenue : A portion of revenue that will be incurred from existing customers.
Our take: In other words, customers are making repeat purchases. Example include: cellular phone subscription, newspaper subscription, perishables and so forth.
 
Reflation : An economic policy to expand the economy by using government fiscal stimulus. 
Our take: Example includes reducing tax or adjusting inflation rate.
 
Reinvestment Rate : The rate of return of reinvested cash flow obtained from an investment.
Our take: Compounding works its magic if investors obtain a decent reinvestment rate for their investment.
 
Reorganization : The shuffling of an organization in order to revive the organization.
Our take: Reorganization is meant for organization/companies to avert bankruptcy.
 
Repatriation : The process of bringing profits obtained from overseas into one's own country.
Our take: Repatriation will strengthen the local currency since foreign exchange is always converted into local currency
 
Repayment : The process of paying down one's debt to creditor.
Our take: All amount owed to creditor has to be repaid eventually.
 
Replacement Cost : The cost of replacing existing assets with similar assets.
Our take: This cost is important to value an existing assets since without these assets, an organization may not function properly.
 
Required Rate of Return : The minimal return required by investors to invest in certain assets.
Our take: If your required rate of return is 10 %, then you won't invest in investment that returns 5%.
 
Research And Development (R & D) : A company's division that is geared towards developing new products or services.
Our take: For example, R & D for a pharmaceutical firm would find a new cure for cancers or avian flu.
 
Retained Earnings : Earnings that is retained by a corporation.
Our take: Retained earnings can be used to reinvest in core business or be kept in the balance sheet as cash & cash equivalents.
 
Revenue  : Sales obtained during a specific period, including discount and returned merchandise.
Our take: Revenue can be manipulated depending on how a company books its revenue. Certain corporation will book revenue when item had been shipped to distributors, regardless of whether a customer will buy them or not.
 
Reverse Stock Split  : The opposite of stock split, this will decrease the number of shares outstanding while increasing the value of the stock per share. 
Our take: Generally, company issues a reverse stock split to avoid delisting. Delisting occurs when a company's stock price traded so low below certain threshold.
 
Revenue  : Sales obtained during a specific period, including discount and returned merchandise.
Our take: Revenue can be manipulated depending on how a company books its revenue. Certain corporation will book revenue when item had been shipped to distributors, regardless of whether a customer will buy them or not.
 
Risk  : Uncertainty related to an investment.
Our take: Investors normally avoid uncertainty. This results in a high reward preposition for investors who are willing to invest in a highly risky investment.
 
Risk Tolerance  : The degree of uncertainty that investors can handle.
Our take: For elder investors, risk tolerance is normally low since they have only certain years before they have to use up their savings for retirement. Younger worker has a higher risk tolerance since they have years ahead of them before retirement.
 
Royalty : Paying certain copyright owners for the right to use his or her patents.
Our take: Royalty is another way to earn revenue without having to sell specific products.
 
Run Rate : Extrapolating past and present result to forecast future trend. 
Our take: A lot of companies have seasonal trend, therefore using quarterly run rate to predict for yearly figure is not an accurate way. 
 

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