ROAD

lating to the shore of the sea or other tidal water, or of a lake or other considerable body of water not having the character of a water-course. But this is not accurate. The proper w~ord to be employed in such connections is “littoral.” See Com. v. Roxbury, 9 Gray (Mass.) 521, note.

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ROAD BLOCK

A method used in advertising where the same ad is broadcast at the same time on all available stations or channels.

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RISK-ADJUSTED RETURN

The rate-of-return, ROR, on an investment from which the ROR on a different investment is deducted as long as the risk is similar.

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RISK-BASED CAPITAL

The sum of money that needs to be retained by the savings institutuion in order to leverage any risks that are associated with the day to day running of the business.

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RISK-FREE RATE OF RETURN

The rate of return that is optimum for an investment without incurring any risk where the investor receives the principal and a small return over a time period.

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RISK-NEUTRAL MEASURES

A frequently and necessary concept used in mathematical finance to measure the probability to evaluate the worth of a derivative.

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RISK-WEIGHTED ASSET

The amount of funds that must be kept on hand by a bank or finance company.

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RISK/REWARD TRADEOFF

The direct relationship that existes between risk and reward. Also called risk/return tradeoff.

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RISKADJUSTED CAPITAL

The calibration of a firms financial andor operating risk and its economic capital to determine its ability to withstand unexpected losses. Refer to regulator capital and risk adjusted return on capital.

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RISKADJUSTED RETURN ON CAPITAL (RAROC)

A calculation where expected losses and expenses are subtracted from revenue, income from capital is added, and this amount is divided by capital to determine risks on projects being considered for investment.

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