A nine-digit numerical code used to identify a banking or other financial institution to clear funds or process checks in the U.S. The routing transit number, as it appears on a check, specifically denotes the banking institution that holds the account in which funds from the check are to be drawn. |||The first four digits of any RTN code will designate the Federal Reserve Bank of the district where the institution is located. The next four digits denote the bank itself, while the last digit is a classifier for the check or negotiable instrument. RTN numbers are often used when setting up a wire transfer or direct deposit relationship with one's personal or business bank.
All of the costs associated with completing a transaction. Also known as round turn transaction costs. |||This includes commissions, market impact costs, and taxes.
A trademarked method for calculating the risk of an asset portfolio. RiskGrades are based on a variance-covariance approach that measures the volatility of assets or asset portfolios as the scaled standard deviations of the returns. More complex RiskGrades calculations allow for a few additional concepts: |||RiskGrades were developed by JPMorgan. You can use RiskGrades to determine the level of risk in your portfolio based on the following numbers: The RG of a risk-free asset is expected to be 0 The RG of a low-risk asset is expected to be 0 - 100 Normal stocks/indexes should have an RG of 100 - 300 Stocks with an RG of 100 - 800 are considered high risk IPOs have an RG greater than 800
An anomaly in the difference between the lower historic real returns of government bonds compared to equities. This puzzle is the inverse of the equity premium puzzle, and looks at the disparity from the perspective from the lower returning government bonds. |||The risk-free rate puzzle is used to explain why bond returns are lower than equity returns by looking at investor preference. If investors tend to seek out high returns, why do they invest heavily in government bonds rather than in equities? If investors did invest in more equities, returns from equities would fall, causing the returns for government bonds to rise and making the equity premium smaller.
An adjustment to the return on an investment that accounts for the element of risk. Risk-adjusted return on capital (RAROC) gives decision makers the ability to compare the returns on several different projects with varying risk levels. RAROC was popularized by Bankers Trust in the 1980s as an adjustment to simple return on capital (ROC).Income from capital = (capital charges)*(risk-free rate)Expected loss = average anticipated loss over the measurement period |||In financial analysis, riskier projects and investments must be evaluated differently from their riskless counterparts. By discounting risky cash flows against less risky cash flows, RAROC accounts for changes in the profile of the investment. In general, the higher the risk, the higher the return. Thus, when companies need to compare and contrast two different projects or investments, it is important to take into account these possibilities.
Also known as revenue passenger miles, RPM refers to how many seats were actually sold on an airline's flight. |||Simply put, a measure of an airline's revenue based on its traffic.
A legal contract that obligates a buyer to buy and a seller to sell a product or service. SPAs are found in all types of businesses but are most often associated with real estate deals as a way of finalizing the interests of both parties before closing the deal. |||Sales and purchase agreements are also found in the upper supply chains of many large, publicly-traded companies. They are set up to help both the suppliers and the purchasers forecast demand and costs, and become increasingly important as the size of the deals increases.
A plan offered by small companies - typically those with fewer than 25 employees - that allows employees to make pretax contributions to their Individual Retirement Accounts (IRAs) through salary reduction. |||Prior to the widespread use of 401(k)s, these plans were seen as a valuable benefit of employment, particularly for employees of small businesses. SARSEPs, as they have affectionately become known, were replaced by another plan (known as "SIMPLE") under the Small Business Job Protection Act of 1996. After 1996, existing plans were allowed to remain in existence, but no new plans were to be created.