Range (price)
A set of prices consisting of the opening price, high sale, low sale and current sale prices of the day for a given bond. The price span during a given trading session, week, month, year, etc.
Rate of return
The current yield or yield to maturity.
Rate reset
The adjustment of the interest rate on a floating-rate security according to a prescribed formula.
Rating
A credit rating of a security provided by an independent rating agency.
Real Estate Investment Trust (REIT)
A corporation that pools the capital of many investors to finance or secure all forms of real estate. REITs do not pay corporate income tax to the IRS.
Real Estate Mortgage Investment Conduit (REMIC)
A multiple-class mortgage cash flow security. A security that represents a beneficial interest in a trust having multiple classes of securities. The securities of each class entitle investors to cash flows structured differently from the payments on the underlying mortgages. Because of changes in the 1986 Tax Reform Act, most CMOs are now issued in REMIC form to create certain tax advantages for the issuer. The terms REMIC and CMO are now used interchangeably.
Real estate owned (REO)
Refers to a property that has been foreclosed upon by the lender and is now owned as real estate by the lender.
Real yield
For an inflation-indexed security, the yield based on the payment stream in constant dollars, i.e. before adjustment by the index ratio.
Realized yield
The return on a bond taking into consideration both purchase price and reinvestment of the coupon payments at a stated rate of interest.
Reciprocal of European terms
One method of quoting exchange rates, which measures the U.S. dollar value of one foreign currency unit; i.e., U.S. dollars per foreign units. See European terms
Reconciliation
The adjustment of one's checkbook balance to match a bank statement.
Record date
The date used to determe the owner entitled to the next scheduled payment of principal or interest on a mortgage security.
Redemption
The retirement of securities by repaying the face value or the call price to the bondholders.
Redemption premium
The amount by which the "call" price of a security exceeds its principal, or par value.
Refinance
Using the proceeds from a new loan to pay off an existing loan, using the same property as collateral.
Refunding
The redemption of a bond issue by a new bond issue at conditions generally more favorable to the issuer.
Registered bond
A bond whose owner's name is printed on the certificate and is recorded on the books of the bond issuer. The bond may only be transferred when the bond is endorsed by the registered owner of the bond.
Registered owner
The name in which a security is registered, as stated on the certificate or on the books of the paying agent. P & I payments are made to the registered owner on the record date.
Registered Representative (RR)
Describes full-time NYSE member organization sales persons who have met the NYSE's background and industry knowledge requirements.
Registrar
The party responsible for maintaining records on the behalf of a bond issuer.
Regular way trade
A bond sale or purchase where the delivery and payment are made on the third business day following the transaction. U.S. Treasury bonds are considered regular way trades if the payment and delivery are made one day following the transaction.
Reinvest
Using the money gained on an investment to buy more of that investment.
The risk that the effective yield of an investment may be reduced because of a decline in interest rates during the life of the investment that results in less income being obtained from reinvesting the investment's interest payments. For an investor, it is the risk that interest income or principal repayments will have to be reinvested at lower rates in a declining rate environment. Reinvestment risk applies to fixed-rate callable securities. Because issuers typically call fixed-rate securities when rates are falling, the investors will have to reinvest their returned principal at a lower prevailing rate. This risk is sometimes referred to as call risk.
Repayment plan
An agreement between a lender and a borrower who is delinquent on his or her mortgage payments, in which the borrower agrees to make additional payments to pay down past due amounts while still making regularly scheduled payments.
Repurchase agreement (repo, RP)
An agreement between a seller of securities and a buyer, whereby the seller agrees to repurchase the securities at an agreed upon price and at a stated time.
Reserve account
An account which a borrower has to fund to protect a lender. Examples of such accounts are capital expenditure accounts, deferred maintenance accounts, etc.
Reserve requirements
The minimum amount of cash and liquid assets as a percentage of demand deposits and time deposits that member banks of the Federal Reserve are required to maintain.
Residual
In a REMIC, the residual is that tranche which collects any cash-flow from the collateral that remains after obligations to the other tranches have been met.
Resistance
A level above which prices have had difficulty penetrating.
Resolution Trust Company
A federal agency created to manage the liquidation process of failed thrift institutions.
Resumption
The reopening the following day of specific futures and options markets that also trade during the evening session at the Chicago Board of Trade.
Retail
Individual investors in securities, not institutional investors.
Return on average common equity
Net income available to common stockholders, as a percentage of average common stockholders' equity.
Revenue bonds
Revenue bonds are issued to finance projects or enterprises in which the bond issuers pledge to the bondholders the revenues generated by the financed projects. Revenue bonds can be used to finance hospitals, water and sewage systems, tunnels, bridges, and turnpikes. Revenues can come from user fees and tolls and are used to repay the bonds. Examples of revenue bonds include 1) Utility -- Used to finance gas, water and sewer, and electric power systems and usually backed by user fees. 2) Health Care -- Used for construction of non-profit hospitals and health care facilities. Debt is normally paid out of gross revenue. 3) Transportation -- Used to finance tunnels, bridges, toll roads, airports and transit systems. User fees are used to pay back debt.
Reverse crush spread
The sale (purchase) of soybean futures and the simultaneous purchase (sale) of soybean oil and meal futures.
Reverse inquiry
A method of initiating issuance of debt securities whereby an investor consults a broker/dealer and then the broker/dealer approaches an issuer with a proposal for a specific security issuance that will meet the investor's needs.
Reverse mortgage
A financial tool which provides seniors with funds from the equity in their homes. Generally, no payments are made on a reverse mortgage until the borrower moves or the property is sold. The final repayment obligation is designed to not exceed the proceeds from the sale of the home.
Reverse repo
The purchase of securities with an agreement to resell them at a higher price at a predetermined future date. Also referred to as a reverse repurchase agreement.
RHS loans
Residential mortgage loans guaranteed by RHS.
Risk-based capital
The amount of capital necessary to absorb losses throughout a hypothetical ten-year period marked by severely adverse circumstances.
Roll-over risk
The risk that tenant leases will not be renewed.
Roll over
A loan allowing the borrower an option to renew the loan upon maturity.
Rollover
A tax-free reinvestment of a distribution from a qualified retirement plan into an IRA or other qualified plan within 60 days. Also called an IRA rollover. Or more generally, a movement of funds from one investment to another.
Round lot
A unit of trading or a multiple of that unit. Typically $100,000 is the measure of round lots of bonds.
Rules of fair practice
Regulations governing the conduct of members of the National Association of Securities Dealers.
Rural Housing Service (RHS)
Federal government agency, formerly known as the Farmers Home Administration (FmHA). Established to provide mortgage credit to qualified borrowers in rural communities, the RHS guarantees loans for rural housing.
Russell-NCREIF property index
A real estate index compiled by Frank Russell Company and the National Council of Real Estate Investment Fiduciaries that tracks the performance of commercial real estate.