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Rate of return
Rate of return is calculated by subtracting the purchase
value by the present value and then dividing it by the purchase
value. For equities, we often include dividends with the present
value.
Real return
The rate of return earned on an investment after adjusting
for the rate of inflation during the time the investment was
held.
Redeem
Cashing in units by selling them back to the mutual
fund.
Redemption load
A fee charged by some funds for redeeming or buying back
fund shares. These charges often decline or are eliminated
after a certain number of years.
Redemption price
The price at which a mutual fund’s
units are redeemed or bought back by a fund. The redemption
price is usually equal to the current net asset value per unit and less the exit
load if any.
Repatriable
The return from abroad of the financial assets
of an organisation or individual, and the conversion of foreign
currency to Rupees.
Repo
Repo or Repurchase Agreements or Ready Forward transactions
are short-term money market instruments. Repo is nothing but
collateralized borrowing and lending. In a repo, securities
(like Government securities and treasury bills) are sold in
a temporary sale with an agreement to buy back the securities
at a future date at specified price.
Reporate
Repo rate is nothing but the annualised interest rate for
the funds transferred by the lender to the borrower in a repo
transaction.
RBI
Reserve Bank of India, established under the Reserve Bank
of India Act, 1934.
Return
The sum of the income of a fund plus its capital gains.
Risk
In general, risk is the possibility of suffering loss. There
are many types of risk, such as credit
risk, principal risk, inflation risk, interest
rate risk, and investment risk. If you are prepared to
accept greater risk, you have the chance of earning higher
returns or profits on your money. Low-risk investments, while
generally safer, often don't keep investors ahead of inflation.
Risk/ reward trade-off
The compromise made between high- and low-risk investments.
High-risk investments generally have greater potential for
high returns than low-risk investments.
Risk tolerance
The willingness of an investor to tolerate the risk of losing
money for the potential to make money.
R-squared
Statistical measure of how closely the portfolio's performance
correlates with the performance of a benchmark index. R-squared
is a proportion that ranges between 0.00 and 1.00. For example,
an R-squared of 1.00 indicates perfect correlation to the
benchmark index, while an R-squared of 0.00 indicates no correlation.
Therefore, a lower R-squared indicates that fund performance
is significantly affected by factors other than the market.
Rupee Cost Averaging
An investment strategy based on investing equal amounts in a
fund at regular intervals. Because more shares
are bought when prices are low and fewer shares when prices
are high, the average cost of your shares may be lower than
the average price over the period you bought them. Rupee- cost
averaging cannot guarantee a profit or protect against loss
in declining markets.
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