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R – Squared |
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A statistical measure that
represents the percentage of a fund's or security's
movements that are explained by movements in a benchmark
index. It is a measure of correlation with the benchmark.
R-squared values range from 0 to 100. An R-squared
of 100 means that all ovements of a security are
completely explained by movements in the index.
ie perfect correlation. |
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Renewable Term Insurance |
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Term insurance which can
be renewed at the end of the term, at the option
of the policyholder and without evidence of insurability,
for a limited number of successive terms. The rates
increase at each renewal as the age of the insured
increases. |
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Repurchase Agreement (Repo) |
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A form of short term borrowing
for dealers in government securities. The dealer sells
the government securities to investors, usually on an
overnight basis, and buys them back the following day.
For the party selling the security (and agreeing to repurchase
it in the future) it is a repo; for the party on the other
end of the transaction (buying the security and agreeing
to sell in the future) it is a reverse repurchase agreement.
Repos are classified as a money-market instrument. They
are usually used to raise short-term capital. |
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Risk Adjusted Rate of Return |
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A measure of how much risk a fund
or portfolio took on to earn its returns, usually expressed
as a number or a rating. This is often represented by
the Sharpe Ratio. The more return per unit of risk, the
better
1) Merger and Acquisition Arbitrage - The simultaneous
purchase of stock in a company being acquired and the
sale |
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(or short sale) of stock in the
acquiring company.
2) Liquidation Arbitrage - The exploitation of a difference
between a company's current value and its estimated liquidation
value.
3) Pairs Trading - The exploitation of a difference between
two very similar companies in the same industry that have
historically been highly correlated. When the two company's
values diverge to a historically high level you can take
an offsetting position in each (e.g. go long in one and
short the other) because, as history has shown, they will
inevitably come to be similarly valued. In theory true
arbitrage is riskless, however, the world in which we
operate offers very few of these opportunities. |
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