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Rule 72(t): Penalty-Free Early Withdrawals from Retirement Accounts What Rule 72(t) Does Rule 72(t) (Internal Revenue Code section 72(t)) lets account holders take early distributions from tax-advantaged retirement accounts—such as IRAs, 401(k)s, and 403(b)s—without incurring the 10% early-withdrawal penalty. Distributions under this rule are still taxable as ordinary income. Key points Withdrawals must follow a…

Rule of 72: What it Is and How to Use It The Rule of 72 is a simple mental-math shortcut for estimating how long it takes for an amount to double at a given annual compounded growth rate — or alternately, the annual rate required to double an amount over a given number of years….

Rule of 70 The Rule of 70 is a quick way to estimate how many years it takes for a quantity to double given a constant annual growth rate. It’s widely used for investments, population growth, GDP, and other exponential-growth situations. Formula If the annual growth rate is expressed as a percent: Years to double…

Rule 144A Rule 144A is an SEC provision, introduced under the JOBS Act and implemented in 2013, that permits private resales of securities among large institutional investors without requiring full SEC registration. It was designed to increase liquidity and efficiency for privately placed securities by allowing trades among qualified institutional buyers (QIBs). How Rule 144A…

Rule 144: Resale of Restricted and Control Securities Explained What Rule 144 Covers Rule 144 (SEC) sets conditions under which restricted, unregistered, and control securities may be resold without registration. It promotes market transparency and helps prevent manipulative insider selling by requiring time-based restrictions, public information availability, volume limits, and specified sales procedures. Key takeaways…

Understanding SEC Rule 10b5-1 What is Rule 10b5-1? Rule 10b5-1 is an SEC regulation that allows insiders of public companies to establish prearranged trading plans for buying or selling company securities. When properly adopted, these plans provide an affirmative defense against insider trading allegations by showing trades were scheduled in advance, without regard to material…

Rule 10b-18: Safe Harbor for Share Repurchases Overview Rule 10b-18 is an SEC safe-harbor rule that reduces potential liability for an issuer (and its affiliated purchasers) when repurchasing the issuer’s common stock, provided the issuer satisfies four specific conditions each day it repurchases shares. Compliance with the rule does not make repurchases mandatory, but it…

Rule 10b-5 Key takeaways Rule 10b-5, adopted under the Securities Exchange Act of 1934, prohibits manipulative or deceptive practices in connection with the purchase or sale of securities. It is the SEC’s primary rule for addressing securities fraud, including insider trading. Rules 10b5-1 and 10b5-2 (adopted in 2000) clarify when trading is “on the basis…

Understanding Royalties Key takeaways * A royalty is a payment made for the ongoing use of someone’s property or rights (e.g., patents, copyrighted works, franchises, minerals). * Royalties are governed by licensing agreements that set rates, duration, territory, and other limits. * Rates are negotiated or set by statute and usually reflect factors such as…

Roy’s Safety‑First Criterion (SFRatio) Roy’s Safety‑First Criterion (SFRatio) is a risk‑management metric that quantifies the probability a portfolio will meet or exceed an investor’s minimum acceptable return. It helps compare portfolios by measuring how many standard deviations the expected return lies above the investor’s threshold. Formula SFRatio = (r_e − r_m) / σ_p Explore More…

Routing Transit Number (RTN) A routing transit number (RTN) is a nine-digit code that identifies a U.S. bank or financial institution for the purpose of processing electronic funds transfers and clearing checks. Often called a routing number, transit number, or ABA number, it ensures transactions are routed to the correct bank. How an RTN is…

Round Lot: What It Is, How It Works, and Trends Key takeaways A round lot is the standard trading unit for a security, typically 100 shares for U.S. stocks or $100,000 face value for bonds. Round lots are often cheaper and faster to execute than odd lots, and exchanges sometimes give them priority. Advances in…

Roth IRA A Roth IRA is an individual retirement account funded with after-tax dollars. Contributions and their earnings can grow tax-free, and qualified withdrawals are tax-free in retirement. Unlike traditional IRAs, Roth contributions are not tax-deductible but qualified distributions are tax-free. Roth IRAs also have no required minimum distributions (RMDs) during the original owner’s lifetime….

Roth 401(k) What is a Roth 401(k)? A Roth 401(k) is an employer-sponsored retirement plan funded with after-tax payroll contributions. You pay income tax on contributions in the year they’re made, and qualified withdrawals in retirement are tax free (both contributions and earnings), provided certain rules are met. Explore More Resources › Read more Government…

Rollover Risk Rollover risk is the danger a borrower faces when existing debt matures and must be refinanced. If market interest rates or credit conditions worsen before refinancing, the borrower may have to replace the maturing debt with new borrowing at a higher cost—or be unable to roll the debt at all. Key takeaways Rollover…

What Is a Rollover? A rollover generally means moving an asset or position from one account, security, or delivery date to another. Common uses: Retirement rollovers — transferring retirement-plan assets from one account to another without triggering taxes. Security rollovers — reinvesting proceeds from a maturing security into a new issue. Forex rollovers — rolling…

Rolling Returns Key takeaways Rolling returns are annualized average returns calculated over overlapping time windows; they smooth short-term volatility and reveal performance consistency. They show how an investment performs for every possible start date within a time series rather than a single fixed period. A common form is trailing 12 months (TTM), which annualizes the…

Understanding Roll Yield Roll yield is the gain or loss that results when an investor replaces (or “rolls”) a near-term futures contract with a later-dated contract. It arises from differences in prices between contracts with different expiration dates and plays a central role in returns for investors who hold futures or futures-based funds without taking…

Roll Forward A roll forward extends the life of a derivatives position by closing an existing contract that is nearing expiration and opening a new contract on the same underlying asset with a later expiry at the current market price. Traders use roll forwards to maintain exposure, avoid physical delivery, adjust risk, or lock in…

Roll-Down Return A roll-down return is the capital appreciation a bond investor can earn as a bond’s maturity shortens and its yield moves down the yield curve—assuming market yields remain relatively stable. It’s an add-on to coupon income that arises from the typical upward-sloping relationship between yield and maturity. How it works The yield curve…

Roll Back A roll back (or roll backward) is an options trading maneuver that closes an existing options position and opens a new one with a nearer expiration date. Aside from the expiration month, the new contract can keep the same strike or be adjusted higher or lower. Traders use roll backs to manage risk,…

Rogue Trader A rogue trader is a financial firm employee who makes unauthorized, often high‑risk trades that can produce outsized gains but also catastrophic losses for the employer and its clients. The term is typically applied only when the bets fail; profitable, high‑risk trades are rarely labeled “rogue” and often earn large bonuses, which creates…

Robotic Process Automation (RPA) What is RPA? Robotic Process Automation (RPA) uses software “robots” to perform basic, repetitive tasks across multiple applications the way a human would. Typical tasks include reading forms, sending confirmation messages, checking for completeness, filing documents, and updating spreadsheets. RPA is designed to reduce manual effort, speed processing, and minimize human…

Key takeaways A robo-advisor is an online, algorithm-driven platform that provides automated investment management and financial planning with minimal human intervention. Most robo-advisors build and maintain passive, indexed portfolios guided by modern portfolio theory (MPT), offering low fees and low minimum balances. Common automated features include portfolio rebalancing and tax-loss harvesting; limitations include reduced human…

Robinson-Patman Act Key takeaways The Robinson-Patman Act (1936) prohibits certain forms of price discrimination for sales of tangible goods in interstate commerce. It aims to protect small-volume buyers from being disadvantaged by lower prices offered to large-volume purchasers. The law applies only to sales of like-grade goods, made within a close timeframe, and that substantially…

Robber Baron: Definition, History, Impact, and Criticism Key takeaways * “Robber baron” originally described medieval lords who seized goods from travelers; in U.S. history it labels late-19th-century industrialists accused of unethical business practices. * Figures commonly called robber barons include Andrew Carnegie, John D. Rockefeller, Cornelius Vanderbilt and other Gilded Age tycoons. * Criticisms focus…

Roadshow: How it Shapes a Successful IPO Key takeaways * A roadshow is a marketing tour during the IPO process where company executives and underwriters present to institutional investors. * Presentations typically include financials, growth strategy, competitive positioning, and management Q&A. * Roadshows help underwriters gauge demand, inform IPO pricing through book building, and build…

Rival Goods: Definition, Examples, and Economic Effects What is a rival good? A rival good is one that can be consumed or used by only one person at a time. Once one person uses the good, it is no longer available for others. Common examples include food, clothing, cars, plane seats, and a bar of…

What are risk-weighted assets (RWAs)? Risk-weighted assets are a way banks and regulators assign risk to each asset on a bank’s balance sheet to determine how much capital the bank must hold. Each asset is given a risk weight (a percentage). Higher weights indicate higher risk and require more capital to back them; lower weights…

Risk Tolerance Key takeaways Risk tolerance is the degree of short-term loss an investor is willing to accept in pursuit of higher long-term returns. Stocks and other volatile assets carry higher risk; bonds, cash, and government-backed securities are lower risk. Age, time horizon, financial goals, income, other assets, and portfolio size all influence risk tolerance….

Risk/Reward Ratio: A Guide for Investors Key takeaways The risk/reward ratio compares the potential loss to the potential gain on an investment or trade. A lower ratio generally indicates a more favorable trade (more reward for each unit of risk); many traders target ratios like 1:3. Use stop-loss orders, position sizing, and protective options to…

Risk Reversal A risk reversal is an options-based strategy used to hedge or express directional conviction while offsetting part or all of the option cost by selling the opposite option. In equity markets it typically consists of buying one side (a put or a call) and selling the other. In foreign exchange markets, “risk reversal”…

Risk-Return Tradeoff The risk-return tradeoff is a fundamental investment principle: potential returns rise with the level of risk an investor is willing to accept. Understanding and measuring this relationship helps investors choose investments and construct portfolios aligned with their goals and tolerance for losses. What it means Low uncertainty typically offers lower expected returns. Higher…

Understanding Risk Profiles A risk profile summarizes the types and levels of risk a person or organization is willing and able to accept. For individuals it guides investment choices and borrowing capacity; for businesses it identifies internal and external threats that could affect stability, profitability, or legal standing. Creating a risk profile helps manage exposure…

Risk Premium Key takeaways * A risk premium is the additional return investors require above a risk‑free rate to compensate for taking on extra risk. * Riskier assets (e.g., equities, lower‑rated bonds) generally offer higher expected premiums. * The equity risk premium (ERP) measures the extra return from stocks over a risk‑free investment and is…