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Ratio Analysis: A Practical Guide What is ratio analysis? Ratio analysis uses figures from a company’s financial statements to evaluate its liquidity, efficiency, profitability, and solvency. Rather than a single metric, it is a toolkit of relationships (ratios) that help investors, managers, and creditors assess performance, compare firms, and track trends over time. Why it…

Ratings in Finance: Definition, How They Work, and Types A rating is an assessment of the creditworthiness or investment quality of a security or issuer. Analysts issue ratings on stocks (e.g., buy, hold, sell) while credit rating agencies assign grades to bonds and issuers that indicate the likelihood of timely repayment and default risk. The…

Rate of Return (RoR): Meaning, Formula, and Examples Definition The rate of return (RoR) measures the percentage gain or loss on an investment relative to its initial cost. It shows how much the investment’s value has changed over a specified period. Basic Formula Rate of return = ((Current value − Initial value) / Initial value)…

Rate of Change (ROC): Definition, Formula, and Uses Rate of Change (ROC) measures how quickly a value changes over time. It’s widely used in mathematics, science, and finance to describe momentum rather than the absolute size of a change. Graphically, ROC corresponds to the slope of a line and is often represented by the Greek…

Rate-and-Term Refinance A rate-and-term refinance replaces an existing mortgage with a new loan that changes the interest rate, the loan term, or both — without advancing any cash to the borrower. Because it does not increase the mortgage principal, it’s often called a “no cash-out refinance.” The goal is usually to lower monthly payments, reduce…

Ratchet Effect What it is The ratchet effect describes processes in economics and organizations that move easily in one direction but are hard to reverse. Named after the mechanical ratchet (which allows rotation one way but not the other), it often creates self-reinforcing changes—similar to a positive feedback loop—and can build up countervailing forces that…

Range in Trading: Definition, Examples, and What It Indicates A range in trading is the difference between the highest and lowest prices of a security or index over a specified period (a day, a month, a year, or any chosen timeframe). On price charts, a single-period range appears as the high and low of a…

Random Walk Theory Random walk theory posits that asset price changes are essentially random and unpredictable. Past price movements offer little or no reliable information for forecasting future prices, because markets quickly incorporate all available information. The theory is closely linked to the efficient market hypothesis (EMH) and has important implications for investors and market…

Random Variables A random variable is a numerical quantity whose value is not fixed in advance but depends on the outcome of a random process or experiment. In probability and statistics, random variables assign numbers to each possible outcome so those outcomes can be analyzed quantitatively. Key points Random variables translate outcomes of random processes…

Ramp-Up: Definition, How It Works, and Examples A ramp-up is a deliberate, substantial increase in a company’s output of products or services in response to current or expected higher demand. Common in start-ups moving from prototype to production, ramp-ups also occur at large firms launching new products or entering new markets. Key takeaways Ramp-up means…

Rally: Definition, How It Works, and Causes A rally is a period of sustained upward movement in the prices of stocks, bonds, or market indexes. It typically follows a period of flat or declining prices and can occur within either a longer-term bull market (bull-market rally) or a longer-term decline (bear-market rally). Key takeaways A…

Racketeering What is racketeering? Racketeering refers to criminal schemes organized to extract illegal profits or to use a business as a vehicle for ongoing criminal activity. In U.S. law, the term is most often associated with the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal statute that targets patterns of illegal conduct by individuals…

Race to the Bottom Key takeaways A “race to the bottom” describes competitive behavior where firms or governments undercut rivals by lowering standards—on quality, wages, taxes, or regulation—to attract business. It commonly appears in labor markets, tax competition, and environmental regulation. Short-term gains can produce long-term harm: worker exploitation, environmental damage, eroded public revenues, and…

Rabbi Trust A rabbi trust is a non‑qualified employee trust employers set up to fund promised deferred compensation or other supplemental benefits. The name traces to an early Internal Revenue Service private letter ruling involving a rabbi and his congregation. It’s designed to provide employees—typically senior executives—with greater assurance that promised benefits will be paid,…

R-Squared: Definition, Calculation, and Interpretation What is R-squared? R-squared (R²), or the coefficient of determination, measures the proportion of variance in a dependent variable that is explained by one or more independent variables in a regression model. It is commonly reported as a value between 0 and 1 (or 0%–100%), where higher values indicate a…

Quoted Price: Definition and What It Tells You A quoted price is the most recent price at which an asset has traded—reflecting the latest agreement between buyers and sellers. It applies to stocks, bonds, commodities, currencies, and derivatives and fluctuates continuously as market conditions and participants’ valuations change. How Quoted Prices Appear Quoted prices for…

Quote stuffing Quote stuffing is a market-manipulation tactic in which traders rapidly submit and then cancel large numbers of orders to flood market feeds. The surge of messages can slow competitors’ systems or create misleading price and liquidity signals, allowing the instigator to gain a temporary trading advantage. Key takeaways Involves placing and quickly cancelling…

Quote-Driven Market: What It Means and How It Works Definition A quote-driven market (also called a price-driven or dealer market) is a trading system where prices are set by market makers, dealers, or specialists who post bid and ask quotations. Traders transact by accepting those quotes or negotiating with dealers, who fill orders from their…

Quote Currency What is a quote currency? In a currency pair, the quote currency (also called the counter currency) is the second currency listed. The exchange rate tells you how many units of the quote currency are required to buy one unit of the base (first) currency. For example, in GBP/USD, GBP is the base…

What Is a Quote? A quote is the most recent price at which an asset traded—the last price agreed upon between a buyer and a seller for some amount of the asset. Quotes are commonly reported as: Last trade price: the most recent executed transaction. Bid quote: the highest current price and quantity a buyer…

Quotation (Finance) Key takeaways * A quotation is the most recent sale price of an asset and usually includes bid and ask prices. * The bid is the highest price a buyer will pay; the ask (offer) is the lowest price a seller will accept. * The bid–ask spread represents a liquidity cost to traders….

Quota Share Treaty — Definition and Overview A quota share treaty is a proportional reinsurance agreement in which an insurer (the cedent) and a reinsurer agree to share premiums, losses, and policy limits at a fixed percentage. The reinsurer accepts a predetermined portion of each policy the insurer writes, and in return receives the same…

Quota What is a quota? A quota is a government-imposed limit on the quantity or value of goods that may be imported into or exported from a country during a specified period. Quotas are a form of trade restriction used to protect domestic industries, control supply, address safety or quality concerns, and manage trade balances….

Quorum Explained: Definition, Best Practices, and Meeting Tips Key takeaways * A quorum is the minimum number of members required for a meeting’s decisions to be valid. * Organizations typically set quorum as a simple majority, but bylaws may specify a different number or percentage. * Practical measures — clear notice, flexible attendance options, and…

Quitclaim Deed What it is A quitclaim deed is a legal document that transfers whatever interest a person (the grantor) may have in a property to another party (the grantee) without making any warranties about the validity or extent of that interest. The grantor simply relinquishes any claim they might have; if they had no…

Quintiles A quintile divides a data set into five equal parts. Each quintile represents 20% of the observations: the first quintile is the lowest 20%, the second is the next 20%, and so on up to the fifth (top) quintile. Key takeaways Quintiles split data into five equal groups (each 20%). They are useful for…

Quiet Title Action A quiet title action is a lawsuit used to resolve competing claims to real property and establish clear, marketable title. It is designed to “quiet” or eliminate conflicting interests so the prevailing party and their heirs hold the property free from future ownership claims by others. Key takeaways Quiet title resolves disputes…

Quiet Title What is a quiet title action? A quiet title action is a lawsuit filed to establish or confirm legal ownership of real property when ownership is disputed, unclear, or burdened by potential claims. Its purpose is to remove “clouds” on the title—liens, competing claims, or other defects—so one person or entity holds a…

What Is a Quiet Period? A quiet period is a regulatory interval that limits what a company, its insiders, and certain affiliated analysts may say publicly to prevent selective disclosure and reduce the risk of insider trading. In the context of an initial public offering (IPO), the U.S. Securities and Exchange Commission (SEC) imposes strict…

Quid Pro Quo Contribution A quid pro quo contribution is a charitable gift for which the donor receives something of value in return from the charity. Unlike a pure donation where the donor receives nothing, a quid pro quo arrangement provides an incentive—such as goods, services, event admission, or merchandise—in exchange for the contribution. How…

Quid Pro Quo: Definition, Examples, and Legal Considerations Quid pro quo is a Latin phrase meaning “something for something.” It denotes an arrangement where one party provides a good, service, or favor in exchange for something of roughly equivalent value from another party. The concept appears across business, law, and politics; its legality and ethical…

What is a quid? “Quid” is informal British slang for one pound sterling (GBP). One quid equals £1, or 100 pence under the modern decimal system. The nickname dates to the late 17th century, but its exact origin is uncertain. Origins of the term Several theories explain the word “quid”: * It may derive from…

Quick-Rinse Bankruptcy: Definition and Overview A quick-rinse bankruptcy is a pre-negotiated, fast-tracked bankruptcy process designed to move through legal proceedings much faster than a typical Chapter 11. All major stakeholders—creditors, unions, shareholders, and often the government—agree on restructuring terms before the company files. The approach gained prominence during the 2008 credit crisis, when it was…

Quick Response (QR) Code — What They Are, How They Work, and Types Definition A Quick Response (QR) code is a two-dimensional (matrix) barcode made of dark modules (typically squares) on a light background. It encodes data in a square grid that imaging devices—most commonly smartphone cameras—can read and translate into text, URLs, contact details,…

Quick Ratio The quick ratio (or acid-test ratio) measures a company’s ability to meet short-term obligations using its most liquid assets. It focuses on assets that can be quickly converted to cash, offering a conservative view of short-term liquidity. Formula Quick Ratio = Quick Assets / Current Liabilities Explore More Resources › Read more Government…