See: Ex-Rights; New Issue; Subscription Right; Warrant

Rising Bottoms
A chart pattern that shows a rising trend in the low prices of a security. This signifies that the security's support levels are increasing. If rising bottoms are combined with ascending tops, a technical analyst would call the pattern bullish.

See: Ascending Tops; Bull Market; Chartist; Range; Support Level; Technical Analysis

Risk
A measurable possibility of losing capital (or not gaining value). The chance that invested capital will drop in value can be caused by many factors including, inflation, interest rates, default, politics, liquidity, call provisions, etc.

See: Call; Default; Inflation; Liquidity; Risk/Reward Ratio; Systematic Risk

Risk Averse
Said of an investor who, given the same return and different risk alternatives, will choose the security with the least amount of risk.

See: Risk; Risk/Reward Ratio

Risk/Reward Ratio
The greater the investment risk--the greater the expected return. The ratio places an investor's desire for capital preservation at one end of the scale and a desire to maximize returns at the other end.

See: Return; Risk; Risk Averse

ROE (Return On Equity)
An amount, stated as a percentage, that informs common shareholders how effectively the funds invested are being utilized during a specific period. Trends can be found if current and prior periods are compared and if compared with industry composites, it shows whether or not the company is keeping up with its competitors. The rate is calculated by dividing net earnings by average stockholders' equity.

See: Common Stock; Equity

Roll Down
A process whereby one option position is closed and a new one with a lower exercise price is established.

See: Exercise Price; Options; Roll Forward

Roll Forward
A process whereby one option position is closed and a new one with a later expiration date is established. If the new position also involves a lower exercise price, it is called a "roll-down and forward". If it involves a higher exercised price, it is called a "roll-up and forward".

See: Exercise Price; Expiration Date; Options; Roll Down; Roll Up

Roll Up
A process whereby one option position is closed and a new one with a higher exercise price is established.

See: Exercise Price; Options; Roll Down; Roll Forward

ROP (Registered Options Principal)
A brokerage firm employee who supervises registered representatives regarding their client's options account activities and their solicitation of new options clients.

See: Broker; Options; Registered Representative

Round Lot
A standard unit of trading, or a multiple thereof, on a securities exchange. Generally, the unit of trading is 100 shares for stock and $1,000 or $5000 par value for bonds. In some inactive stocks, the unit of trading is 10 shares.

See: Odd Lot; Par

RR (Registered Representative)
A brokerage firm employee who acts as an account executive for clients. In a full brokerage house, a registered representative solicits clients' business and provides advice on when to buy and sell securities. For this advice, the RR may receive a percentage of the commission that is charged to the client for making such transactions. In a discount firm, a RR facilitates the execution of client orders. The RR does not solicit new customers or give investment advice.

See: Account Executive; Broker; Commission; Full Service Broker

Rule 144
Rule that stipulates the conditions in which an unregistered security may be sold by a broker. Specific documentation must be completed by the owner and presented to a broker before a sell order can be placed. Moreover, a letter security may not be sold for at least one year from the date of purchase. Thereupon, during any three month period, the following amounts may be sold:

* If the corporation's securities are unlisted, 1% of the outstanding shares;
* If the corporation's securities are listed, the greater of 1% of the amount outstanding or the average trading volume within the past four weeks.

See: Broker; Letter Security; Listed Security; Unlisted Stock; Unregistered Stock; Volume

Rules of Fair Practice
NASD rules that relate to a broker-dealer's conduct of business. In short, the basic rules:

* Promote just and equitable principles of trade for the protection of investors;
* Prevent fraud and manipulative practices;
* Consult with government and investors on matters of common concern and;
* Prevent excessive commissions and charges.

All exchanges and securities associations have similar rules.

See: Broker; Commission; Dealer; Know Your Customer; NASD; Securities Industry Association

Rumortrage
A traders' term to describe the buying and selling of securities based on the rumor of a takeover.

See: Garbatrage; Takeover

Running Ahead
Situation that occurs when a broker places an order to buy or sell a security for their own account before placing a comparable order for a client. For example, a broker, places an order to buy XYZ when the firm's analyst makes a positive recommendation. Afterwards, the broker informs the client of the recommendation and places a buy order. By buying before the client, the broker is attempting to obtain a better price than the client's.

Runoff
The printing of closing prices on the ticker tape after the market has already closed. A runoff usually occurs in very heavy trading in which the tape has fallen behind.

See: Closing Price; Ticker Tape