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Regressive Tax: Definition and Types Key takeaways * A regressive tax takes a larger percentage of income from low‑income earners than from high‑income earners because it applies uniformly regardless of ability to pay. * Common regressive taxes include sales taxes, excise taxes, tariffs, user fees, property taxes (in practice), and payroll taxes with wage caps….

Regression: Definition and Purpose Regression is a statistical method for modeling the relationship between a dependent (response) variable and one or more independent (explanatory) variables. It quantifies how changes in the independent variables are associated with changes in the dependent variable and is used for prediction, explanation, and hypothesis testing. Key uses: * Predicting outcomes…

Registered Representative (RR): Definition, Job Description, Pay A registered representative (RR) is a licensed financial professional who is authorized to buy and sell securities and other investment products on behalf of clients. RRs typically work for broker-dealers, brokerage firms, or other client-facing financial organizations and may be called brokers, financial advisors, or account executives depending…

Registered Investment Advisor (RIA) What an RIA Is A Registered Investment Advisor (RIA) is a person or firm that provides investment advice and portfolio management for a fee. RIAs are governed by the Investment Advisers Act of 1940 and owe a fiduciary duty to act in the best interests of their clients. Services often include…

Registered Education Savings Plan (RESP): What It Is and How It Works What is an RESP? A Registered Education Savings Plan (RESP) is a Canadian government‑sponsored savings program that helps families save for a child’s post‑secondary education. Contributions grow tax‑deferred, and the government adds matching grant money to boost savings. Contributions themselves are not tax‑deductible….

Reflexivity Reflexivity is an economic theory that describes how market participants’ perceptions influence economic fundamentals, and how those changing fundamentals in turn reshape perceptions and prices. Coined for finance by investor George Soros, reflexivity emphasizes feedback loops that can drive markets away from equilibrium and create persistent price distortions. Key points Investors act on perceptions,…

Refinance: What It Is and How It Works Definition A refinance (or refi) replaces an existing loan with a new loan to obtain better terms — commonly a lower interest rate, different loan duration, or access to cash. The new loan pays off the old one; because it’s a fresh credit agreement, the lender re-evaluates…

Reference Rate A reference rate is a benchmark interest rate used to set other interest rates in financial contracts. Common reference rates include the federal funds rate, the Secured Overnight Financing Rate (SOFR), the prime rate, and yields on benchmark U.S. Treasury securities. Reference rates appear in consumer products (like adjustable-rate mortgages) and in institutional…

Reference Number — What it is and how it works A reference number is a unique identifier—usually a combination of letters and numbers—assigned to a single transaction, request, or record. Financial institutions, merchants, carriers, and service teams use reference numbers to locate and track individual items in large databases. How reference numbers are generated and…

Redlining What is redlining? Redlining is a discriminatory practice that denies or restricts access to financial services—most commonly mortgages—based on the racial or ethnic composition of a neighborhood rather than an individual’s creditworthiness. It typically results in reduced lending, higher-cost or predatory lending, and disinvestment in minority communities. Racial redlining is illegal. Origins and how…

Redemption Redemption is the return of principal or value to an investor when a security or instrument is repaid or exchanged. In finance, it most commonly refers to repaying bonds at maturity (or earlier) and selling—or having repurchased—mutual fund shares. Redemptions can affect taxable gains or losses and may be settled in cash or, sometimes,…

Red Herring Prospectus (Red Herring Filing) What it is A red herring prospectus is a preliminary registration document filed with the U.S. Securities and Exchange Commission (SEC) as part of an initial public offering (IPO). It provides potential investors with material information about the company while omitting final details such as the offering price and…

Recurring Revenue What it is Recurring revenue is the portion of a company’s sales that it expects to receive on a regular, ongoing basis. Unlike one‑time transactions, recurring revenue is predictable and repeatable, providing a stable foundation for forecasting future cash flows and growth. How it works Recurring revenue typically arises when customers commit to…

Recurring Billing: Definition, How It Works, Types, and Practical Guidance Key takeaways * Recurring billing is an automated process where a merchant charges a customer on a prearranged schedule with the customer’s consent. * Common uses: subscriptions, utilities, memberships, and any service with regular payments. * Benefits for businesses: predictable revenue, improved cash flow, lower…

Recovery Rate What it is The recovery rate is the percentage of a loan or bond’s face value (principal plus accrued interest) that creditors recover after a default or bankruptcy. It represents the settlement value a lender receives when an instrument emerges from default or when assets are liquidated. Key points Recovery Rate = Amount…

Recourse Loan: What it Is and How It Works A recourse loan is a secured loan that gives the lender the right to seize the pledged collateral and pursue the borrower’s other assets or income if the collateral’s sale doesn’t fully cover the unpaid debt. Lenders may also take legal action to collect any remaining…

Recourse What is recourse? Recourse is the lender’s legal right to pursue a borrower’s assets to satisfy a debt when the borrower defaults. In a recourse loan, the lender can seize the pledged collateral and — if the collateral’s value is insufficient — seek other borrower assets or court remedies (deficiency judgment, bank levies, wage…

Record Date What the record date is The record date (or date of record) is the cutoff a company sets to determine which shareholders are officially on the books and therefore eligible to receive a declared dividend or distribution. Companies use the record date to lock in the roster of shareholders who will receive a…

Account Reconciliation: What It Is and How It Works Definition Account reconciliation is the process of comparing two sets of financial records — typically internal ledgers and external statements (bank statements, invoices, credit card bills) — to confirm they match and are accurate. It helps detect errors, omissions, and potential fraud and is a critical…

Recharacterization: Understanding IRA Recharacterization, Rules, and Process What is recharacterization? Recharacterization lets you treat a contribution you made to one type of IRA as if it were made to the other type. Common uses: Change a Roth IRA contribution into a traditional IRA contribution (or vice versa) for the same tax year. Correct a contribution…

Recessionary Gap Key takeaways A recessionary (or contractionary) gap occurs when an economy’s real GDP is below its potential (full‑employment) GDP. It typically accompanies reduced output, downward pressure on prices, and higher unemployment. Policymakers can use expansionary fiscal or monetary policy to close the gap and restore output. What is a recessionary gap? A recessionary…

Recession Key takeaways A recession is a significant, widespread, and prolonged decline in economic activity—commonly measured by falling GDP, employment, and production. The “two consecutive quarters of negative GDP” rule is a simple guide, but official dating (e.g., by the NBER) relies on multiple indicators and is often determined retroactively. Common predictors include an inverted…

Recency, Frequency, Monetary Value (RFM) Recency, Frequency, Monetary Value (RFM) is a simple, data-driven method for grouping customers by how recently they purchased, how often they purchase, and how much they spend. By scoring each customer on these three dimensions, businesses can identify high-value customers, predict future buying behavior, and tailor marketing actions to improve…

Receivership — an overview Receivership is a remedy used to preserve and manage a company’s assets when it faces financial distress or when a secured creditor seeks to protect collateral. A receiver — an independent, court-recognized trustee or manager — takes control of specified assets or the business to protect value, collect revenues, pay expenses,…

Receivables Turnover Ratio The receivables turnover ratio measures how efficiently a company collects payments from customers by showing how many times average accounts receivable is converted into cash over a given period (typically a year). It helps monitor cash flow, evaluate credit and collection policies, and identify trends that affect liquidity. Formula Receivables turnover ratio…

Accounts Receivable (AR): Definition and Key Points Accounts receivable (AR) is the amount of money a business is owed for goods or services it has delivered but not yet been paid for. It appears on the balance sheet as a current asset because payment is expected within one year and it contributes to a company’s…

Receipt A receipt is a written or electronic acknowledgment that something of value has been transferred from one party to another. It serves as proof that a payment, sale, or transfer took place and is used by consumers, businesses, banks, and financial markets to document transactions. Key takeaways Receipts document financial transactions and serve as…

Recapitalization Recapitalization is the process of restructuring a company’s mix of debt and equity to stabilize or change its capital structure. It typically involves converting one form of financing into another—issuing equity to reduce debt, or issuing debt to buy back equity—and can be used by private firms, public companies, and governments. Key takeaways Recapitalization…

Understanding Rebates Key takeaways * A rebate is money returned to a buyer after a purchase or a payment made to the lender of borrowed securities in short selling. * Rebates differ from discounts: discounts reduce price at sale, rebates require a post‑purchase claim. * In securities trading, rebate payments and fees are handled through…

Rebalancing Your Portfolio: Definition, Strategies, and Examples Key takeaways * Rebalancing restores a portfolio’s asset allocation to match an investor’s target mix and risk profile. * Common strategies include calendar rebalancing, constant-mix (band) rebalancing, constant proportion portfolio insurance (CPPI), and smart beta. * Regular rebalancing helps control unintended risk drift but can incur transaction costs…

Realtor: Who They Are and What They Do A Realtor is a licensed real estate professional who is a member of the National Association of Realtors (NAR) and agrees to follow its Code of Ethics. The designation signals a commitment to higher professional and ethical standards than those required by a state real estate license…

Realized Yield: Overview and Types Realized yield is the actual return an investor earns over a holding period. It includes cash distributions (interest, coupons, dividends), plus any change in principal value. For instruments with maturity dates (bonds, CDs), realized yield often differs from the stated yield to maturity (YTM) because it reflects what actually happened…

Realized Loss: What It Means and How It Works What is a realized loss? A realized loss occurs when an asset is sold, scrapped, or otherwise disposed of for less than its original purchase price (cost or book value). It contrasts with an unrealized loss, which exists only on paper while the asset is still…

Realized Gain A realized gain occurs when you sell an asset for more than its purchase price, converting a paper increase in value into actual profit. Realized gains create taxable events; by contrast, unrealized gains are increases in value while the asset is still held and are not taxed until the asset is sold. Key…

Realization Multiple (DPI): Definition, Formula, and Uses What it is The realization multiple—also called distributed to paid-in capital (DPI)—measures how much cash a private equity or venture capital fund has returned to investors relative to the capital investors have paid in. It captures realized, distributed returns rather than paper or unrealized gains. Formula Realization Multiple…