risk-adjusted rate of return

The profit, often but not always expressed as a percentage rate of return on allocated capital, after recognizing applicable costs for credit risk, interest rate risk, liquidity risk and/or other financial risks. In some measures, risk costs are treated as expenses. In other measures, they are reflected in the amount of capital allocated in the denominator of the return on capital ratio. American Banker Glossary

Financial and business terms. 2012.

Look at other dictionaries:

  • Норма прибыли с поправкой на риск (RISK-ADJUSTED RATE OF RETURN)  — В бюджете капитальных вложений это процент отдачи, корректируемый под ожидаемый риск проекта. Текущая стоимость проекта, риск которого может быть больше среднего, определяется по ставке выше средней. Называется также Учетная ставка с поправкой на …   Словарь терминов по управленческому учету

  • Risk adjusted return on capital — (RAROC) is a risk based profitability measurement framework for analysing risk adjusted financial performance and providing a consistent view of profitability across businesses. The concept was developed by Bankers Trust in the late 1970s. Note,… …   Wikipedia

  • risk-adjusted return on capital — ( RAROC) An economic approach to measure unit and product profitability within a financial institution. Returns, adjusted to reflect normalized or expected losses, are divided by an amount of capital that is carefully quantified to reflect the… …   Financial and business terms

  • Rate of return — In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested.… …   Wikipedia

  • risk-adjusted return on capital — Fin return on capital calculated in a way that takes into account the risks associated with income. EXAMPLE Being able to compare a high risk, potentially high return investment with a low risk, lower return investment helps answer a key question …   The ultimate business dictionary

  • risk-adjusted return — The profit, often but not always expressed as a percentage rate of return on allocated capital, after recognizing applicable costs for credit risk, interest rate risk, liquidity risk and/or other financial risks. In some measures, risk costs are… …   Financial and business terms

  • Return On Risk-Adjusted Capital - RORAC — A rate of return used in financial analysis, whereby riskier projects and investments are evaluated based on the capital at risk. RORAC makes it easier to compare and contrast projects with different risk profiles. Allocated risk capital = the… …   Investment dictionary

  • Risk Adjusted Return On Capital — Die RAROC Steuerung (Risk Adjusted Return on Capital) kennzeichnet ein wertschöpfungsorientiertes Zielsystem, welches in Kreditinstituten zur Anwendung kommt. Mit ihm lässt sich die Wertschöpfung (aus rein ökonomischer Sicht) auf verschiedenen… …   Deutsch Wikipedia

  • Risk-Adjusted Return On Capital - RAROC — An adjustment to the return on an investment that accounts for the element of risk. Risk adjusted return on capital (RAROC) gives decision makers the ability to compare the returns on several different projects with varying risk levels. RAROC was …   Investment dictionary

  • Учетная ставка с поправкой на риск (RISK-ADJUSTED DISCOUNT RATE)  — См. Норма прибыли с поправкой на риск ( Risk Adjusted Rate of Return) …   Словарь терминов по управленческому учету

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.