Glossary R

RAN's

Revenue Anticipation Notes. Short term debt instruments (usually less than one year) intended to be paid from some future planned revenue, such as tax receipts, etc. Generally, only specific revenues are pledged as security to pay off RAN's when they mature. RAN's are usually issued by governmental entities whose revenue collections do not coincide with their cash flow needs.

Rate

The percentage of interest paid to borrow money from a lender.

Rate Cap

The limit on how much the interest rate on an adjustable rate mortgage (ARM) loan can change during an adjustment period, or over the life of the loan. For example, suppose a lender offers a rate cap of 1% and the current interest rate is 6%. Based on the cap, the interest rate will stay between 5% and 7% at each adjustment. A lender will provide this information for each of its adjustable rate mortgage products.

Real Estate Funds

Real Estate Mutual Funds seek capital appreciation and income by investing in equity securities of real estate investment trusts and other real estate industry companies.

Recapitalization

The restructuring of a company's capital debt structure, often involving refinancing of its existing debt.

Record Date

The date for determining the owner entitled to the next scheduled payment of principal or interest on a mortgage security.

Refinancing

Paying off one loan with the proceeds from a new loan using the same property as security. Consider refinancing when you can gain a lower interest rate, shorten the term of your loan, or want to get cash out of your property's equity.

Refunded Bonds

Bonds which have been advance refunded.

Refunding Bonds

Bonds whose proceeds are used to advance refund an older series of bonds.

Regular Way Settlement

Settlement of a trade in the normal course of business. For corporate and Preferreds this typically is the third business day. For governments and agencies, this typically is the next business day.

REIT

Real Estate Investment Trust, an organization similar to an investment company in some respects but concentrating its holdings in real estate investments. The yield is generally liberal since REITs are required to distribute as much as 90% of their income.

Relative Strength

Measure of the market performance of a stock in comparison to its own industry and/or a market index for a stated time period.

Residual

In a CMO, the residual is that tranche which collects any cash flow from the collateral that remains after obligations to the other tranches have been met.

RESPA (Real Estate Settlement Procedures Act)

A federal law that, among other things, requires lenders to disclose all settlement costs. It gives you the legal right to review estimated closing costs after you apply for a loan, and again at or before settlement. It also requires lenders to tell you about other business relationships it has with companies that may provide you with services.

Return

The annual return on an investment that includes income, capital gains, and interest.

Reverse Mortgage

A type of loan that can provide income to people who own their home or have considerable equity. The lender makes periodic payments to the homeowner, using the equity as collateral. At the end of the loan, the lender usually sells the home. Many retired people consider reverse mortgages as a way to supplement their fixed income.

Right

When a company wants to raise more funds by issuing additional securities, it may give its stockholders the opportunity or "right", ahead of others, to buy the new securities in proportion to the number of shares each owns. Because the additional stock is usually offered to stockholders below the current market price, rights ordinarily have a market value of their own and are actively traded. In most cases they must be exercised within a relatively short period of time. Failure to exercise or sell rights may result in monetary loss to the holder.

Rights of Accumulation

Allows shareholders to qualify for reduced sales charges on additional mutual fund purchases of front-end load mutual fund shares.

Rights Offering

An offering that gives each shareholder a chance to exercise his/her preemptive rights.

Risk Measurement

A mutual fund's level of risk is determined by the following measurements. Please refer to the particular measurement in the Glossary for more information. *Alpha - A measure of risk adjusted performance used to quantify the difference between the security's actual performance and the performance anticipated in light of the security's risk (beta) and the market's (relative market index) behavior. *Beta - A measure of a security's volatility in relation to the equity market as measured by the market index relative to each security's investment category. R-Squared - A measure of a security's diversification in relation to the market, this statistic indicates the percentage of a security's risk which cannot be eliminated through further diversification. Standard Deviation - A statistical measure of the month-to-month ups and downs of a security's return. Treynor Ratio - A gauge of risk-adjusted performance calculated by dividing the excess return of a portfolio above the risk-free rate by its beta coefficient. Higher values are desirable and indicate greater return per unit of risk. Sharpe - A measure of risk-adjusted performance calculated by dividing the excess return of a portfolio above the risk-free rate by its standard deviation. Higher values are desirable and indicate greater return per unit of risk. *A security's alpha and beta are calculated in relation to a market index. All securities are linked to an appropriate index based on their investment objective.

R-Squared (Percentage)

A measure of a security's diversification in relation to the market, this statistic indicates the percentage of a security's risk, which cannot be eliminated through further diversification. In precise percentage terms, this figure indicates just how closely a security's performance variation paralleled the market over the same time period. Lower figures indicate less correlation with the market, and hence lower significance of the beta statistic. A relative market index is used as a proxy for the market when measuring R-Squared.

Rule 12(b) 1

Rule 12(b) 1 was introduced in 1980 by the Securities and Exchange Commission to allow mutual fund companies to add an annual charge for marketing and distribution. The fee, which is referred to as a 12(b) 1 fee, is subtracted from the mutual fund's assets and used for such things as advertising or to pay additional commissions to the brokers who sell the mutual funds. If a mutual fund has a 12 (b)-1 fee, it will be disclosed in the fee table of a prospectus.

Russell 2000

An index considered to be a benchmark of small cap stocks.