Author: user

Relief Rally: Definition, Causes, and How to Spot One What is a relief rally? A relief rally is a temporary rise in asset prices that interrupts a broader downward trend. It typically occurs during a secular (long-term) bear market or an extended sell-off and provides short-lived “relief” to investors before the larger downtrend resumes. Common…

Relevant Cost Relevant cost is a managerial accounting concept describing costs that will be affected by a specific decision. These are future costs that can be avoided depending on the choice made. Identifying relevant costs helps managers focus on the financial effects that matter for comparing alternatives and avoids being misled by costs that are…

Relative Vigor Index (RVI) Key takeaways * The Relative Vigor Index (RVI) is a momentum indicator that measures trend strength by comparing closing price to the trading range and smoothing results with moving averages. * RVI is a centered oscillator (around a zero line). Crosses of its signal line and divergences with price are common…

What Is Relative Value? Relative value is a valuation approach that assesses an asset’s worth by comparing it to similar assets. Instead of estimating intrinsic worth from first principles, relative valuation uses market multiples and peer comparisons to determine whether an asset appears cheap, fair, or expensive relative to its competitors. Common Multiples and Metrics…

Relative Valuation Model Overview A relative valuation model estimates a company’s value by comparing it to similar businesses using market-based multiples and ratios. Instead of calculating intrinsic worth from first principles, it answers: how does the company trade relative to its peers? This approach helps determine whether a stock appears overvalued, undervalued, or fairly priced…

Relative Strength Index (RSI) The Relative Strength Index (RSI) is a momentum oscillator used in technical analysis to measure the speed and magnitude of recent price changes. Plotted as a line on a 0–100 scale, it helps identify overbought and oversold conditions, potential trend reversals, and momentum shifts. Key points RSI ranges from 0 to…

Relative Strength: A Guide to Momentum Investing What is relative strength? Relative strength is a momentum-based investment approach that seeks securities (stocks, sectors, ETFs, bonds, REITs, etc.) that are outperforming a chosen benchmark or their peers. The idea is to follow assets showing stronger upward momentum with the expectation that the trend will continue long…

Relative Purchasing Power Parity (RPPP) Relative purchasing power parity (RPPP) is an extension of purchasing power parity (PPP) that links differences in inflation between two countries to proportional changes in their exchange rate over time. It provides a theoretical framework for how inflation differentials should affect currency values and real purchasing power across borders. Key…

Relationship Manager A relationship manager builds and maintains strong, value-driven connections between a company and its clients, partners, suppliers, or internal business units. By combining communication, analytical insight, and industry knowledge, they help organizations retain customers, identify growth opportunities, and improve operational collaboration. Key takeaways Relationship managers strengthen business and client relationships to maximize long-term…

Relationship Management: Definition, Types, and Importance Key takeaways Relationship management is the strategy companies use to build and maintain ongoing engagement with customers and business partners. It applies to B2C (customer relationship management, CRM) and B2B (business relationship management, BRM). Effective relationship management uses data, software, and skilled staff to increase loyalty, reduce risk, and…

Related-Party Transactions: Definition, Risks, and Regulations Overview Related-party transactions are deals between entities or individuals that have a preexisting relationship or common interest—examples include transactions with subsidiaries, affiliates, major shareholders, executives, or family members. While not inherently illegal, these transactions can create conflicts of interest that harm minority shareholders, distort financial statements, or conceal liabilities…

Reinvestment Risk Key takeaways * Reinvestment risk is the chance that income received from an investment (coupon payments, interest, dividends) must be reinvested at a lower rate than the original investment’s return. * Callable bonds are particularly exposed because issuers tend to redeem them when rates fall. * Mitigation strategies include non-callable or zero‑coupon securities,…

Reinvestment Rate The reinvestment rate is the return an investor expects to earn when cash flows (interest, coupon payments, or principal) from one investment are placed into another. It is expressed as a percentage and directly affects the long‑term return on fixed‑income investments such as Treasury securities, municipal bonds, certificates of deposit (CDs), and preferred…

Reinvestment: Definition and How It Works Reinvestment is the practice of using income from an investment—such as dividends, interest, or other distributions—to buy additional shares or units of the same investment instead of taking the income as cash. By continually plowing distributions back into the investment, investors can take advantage of compounding to grow holdings…

Reinsurance Ceded What it is Reinsurance ceded is the portion of risk a primary insurer transfers to another insurer (a reinsurer) to reduce its overall exposure. The original insurer is the ceding company; the reinsurer is the accepting company. In exchange for taking on risk, the reinsurer receives a premium. Reinsurance is often described as…

Reinsurance: Definition, Types, and How It Works Reinsurance is insurance purchased by an insurance company (the cedent) from another insurer (the reinsurer) to transfer part of its risk exposure. By sharing or ceding portions of policies, insurers reduce their liability for large or concentrated losses, stabilize financial results, and increase capacity to underwrite more business….

What Is Reimbursement? Reimbursement is repayment for expenses someone paid out of pocket on behalf of an organization or another party. Common examples include business travel costs, medical expenses covered by insurance, tax overpayments returned by the government, and court-ordered payments like reimbursement alimony. When handled properly (for example, under an employer’s accountable plan), reimbursements…

Rehypothecation: Definition, How It Works, Risks, and Protections What is rehypothecation? Rehypothecation is the practice whereby a bank, broker, or other financial intermediary reuses assets pledged as collateral by a client to secure its own borrowing or trading. Common collateral items include securities held in margin accounts. Rehypothecation can increase market liquidity and reduce borrowing…

Regulatory Risk Regulatory risk is the possibility that changes in laws, regulations, or the enforcement environment will materially harm a business, sector, or investment. New rules can raise operating costs, restrict products or markets, alter competitive dynamics, or—even in extreme cases—undermine a company’s business model. Key takeaways * Regulatory risk arises from changes to laws,…

Regulatory Capture: Definition and Examples Key takeaways * Regulatory capture occurs when a regulatory agency advances the commercial or political concerns of the industry it is charged with regulating, rather than the public interest. * It arises from concentrated industry incentives, large lobbying budgets, and personnel ties between regulators and industry (the “revolving door”). *…

Understanding Regulation Z: Truth in Lending Act Explained Regulation Z implements the Truth in Lending Act (TILA). Enacted as part of the Consumer Credit Protection Act of 1968, it requires lenders to disclose clear, standardized information about credit terms so consumers can compare offers and avoid predatory practices. It also gives borrowers certain cancellation and…

Regulation W in Banking: Limits on Bank–Affiliate Transactions Regulation W implements Sections 23A and 23B of the Federal Reserve Act to limit risks from transactions between a bank and its affiliates. It sets quantitative caps, collateral standards, and market‑terms requirements to prevent banks from using federally backstopped funds to subsidize affiliated entities. The rule applies…

Regulation U Explained: Bank Requirements & Securities Lending What is Regulation U? Regulation U is a Federal Reserve rule that restricts how much credit banks and similar lenders can extend when securities are used as collateral to purchase additional securities (margin lending). Its primary aim is to limit leverage that could amplify losses for borrowers…

Regulation T (Reg T): Definition, Requirement, and Example What is Regulation T? Regulation T (Reg T) is a Federal Reserve rule that governs the extension of credit by brokers and dealers to customers for the purchase of securities. Its primary purpose is to limit how much an investor can borrow from a brokerage to finance…

Regulation SHO Explained: Short Sale Rules and Key Requirements What is Regulation SHO? Regulation SHO is a set of Securities and Exchange Commission (SEC) rules, adopted in 2005, that govern short selling in U.S. equity markets. Its main goals are to curb naked short selling (selling shares that have not been located or borrowed) and…

Regulation O: Purpose in Banking, Applications, and Requirements Overview Regulation O is a Federal Reserve rule that governs extensions of credit by member banks to their insiders. Its primary aim is to prevent directors, executive officers, and principal shareholders from receiving more favorable lending terms than ordinary customers. What Regulation O Covers Applies to national…

Understanding Regulation E: Your Guide to Electronic Fund Transfers Regulation E implements the Electronic Fund Transfer Act (EFTA) and sets rules and consumer protections for electronic fund transfers (EFTs). It covers common electronic transactions—ATM withdrawals, point-of-sale (debit card) purchases, and Automated Clearing House (ACH) transfers—and establishes procedures for error resolution, liability, disclosures, and institution responsibilities….

Regulation DD: What It Is and How It Works Key takeaways * Regulation DD implements the Truth in Savings Act to promote transparency and comparability of deposit accounts. * It requires depository institutions to disclose key terms—APY, interest rates, fees, minimum balances, and other terms—in a clear, conspicuous, and retainable form. * The rule covers…

SEC Regulation D Explained: Key Exemptions, Rules & Benefits Key takeaways Regulation D (Reg D) provides SEC exemptions that let companies raise capital through private placements without registering securities with the SEC. Issuers must file Form D electronically after the first sale of securities. Rule 504 allows up to $10 million in a 12-month period;…

What Is Regulation CC? Definition, Purpose, and How It Works Regulation CC is a Federal Reserve rule that implements the Expedited Funds Availability Act (EFAA) and the Check Clearing for the 21st Century Act (Check 21). It sets standards for how quickly banks must make deposited funds available to customers and for efficient check collection…

Regulation B (Reg B) in the Equal Credit Opportunity Act (ECOA) Regulation B implements the Equal Credit Opportunity Act (ECOA) to prohibit discrimination in credit transactions. It requires creditors to base credit decisions on creditworthiness, not on personal characteristics, and it sets rules for information requests, adverse-action notices, and enforcement. Key takeaways Reg B prohibits…

What Is Regulation A? Definition, Update, Documentation, and Tiers Regulation A is an exemption under the Securities Act of 1933 that lets companies offer and sell securities to the public without full SEC registration. It provides a simplified path for smaller issuers to raise capital while requiring specific disclosure and filing steps to protect investors….

Regulated Investment Companies (RICs): Definition, Taxes & Examples What is a Regulated Investment Company (RIC)? A Regulated Investment Company (RIC) is an investment fund that meets specific IRS and SEC criteria so it can pass income directly to shareholders without paying corporate income tax on those amounts. This pass-through, often called the conduit theory, lets…

What is RegTech? Regulatory technology (RegTech) applies modern technologies—cloud computing, big data, and machine learning—to simplify and automate regulatory compliance for financial institutions. It streamlines monitoring, reporting, risk detection, and recordkeeping to make compliance faster, more accurate, and less costly. Key takeaways RegTech uses automation, analytics, and cloud-based delivery (SaaS) to improve regulatory compliance. Real-time…

Regret Theory: Meaning, Psychology, Applications Key takeaways * Regret theory describes how anticipation of future regret influences decision-making. * Fear of regret can push people toward excessive caution or toward risky, impulsive choices. * In investing, regret combines with FOMO to fuel bubbles and poor timing decisions. * Awareness, rules-based processes, and automation help reduce…