What Is Risk-Seeking? Risk-seeking is one’s acceptance of greater risk, in finance often related to price volatility and uncertainty in investments or trading, in exchange for the potential for higher returns. Risk seekers are more interested in capital gains from speculative assets than capital preservation from lower-risk assets. Risk-seeking can be contrasted with risk-averse. Key
What Is Risk Tolerance? Risk tolerance is the degree of risk that an investor is willing to endure given the volatility in the value of an investment. An important component in investing, risk tolerance often determines the type and amount of investments that an individual chooses. Greater risk tolerance is often synonymous with investment in
What Are Risk-Weighted Assets? Risk-weighted assets are used to determine the minimum amount of capital a bank must hold in relation to the risk profile of its lending activities and other assets. This is done in order to reduce the risk of insolvency and protect depositors. The more risk a bank has, the more capital
What is a Residential Mortgage-Backed Security (RMBS)? Residential mortgage-backed securities (RMBS) are a debt-based security (similar to a bond), backed by the interest paid on loans for residences. The interest on loans such as mortgages, home-equity loans and subprime mortgages is considered to be something with a comparatively low rate of default and a comparatively
What Are Rights of Accumulation (ROA)? Rights of accumulation (ROA) are rights that allow a mutual fund shareholder to receive reduced sales commission charges when the amount of mutual funds purchased plus the amount already held equals a rights of accumulation (ROA) breakpoint. Key Takeaways Rights of accumulation (ROA) grant holders of mutual fund shares the potential
What Is a Robber Baron? “Robber baron” is term used to describe America’s most successful industrialists. This derogative term was primarily used during the era of the late 19th century often known as the Gilded Age. The term robber baron is also sometimes used to describe any successful businessperson whose practices are considered unethical or unscrupulous. This
Robert C. Merton is an American economist who won the 1997 Nobel Memorial Prize in Economic Sciences. Merton, along with Fisher Black and Myron Scholes, developed a method of determining the value of options, referred to as the Black-Scholes model. Merton also developed an intertemporal capital asset pricing model (CAPM) based on William Sharpe’s capital
Robert Crandall served as the president, CEO, and chair of AMR Corporation, the holding company for American Airlines, from 1985 to 1998. Crandall is known for his executive leadership and innovations, including a revolutionary computer reservation system for travel agents. Key Takeaways For more than two decades, Robert Crandall sat as the president, CEO, and
Robert F. Engle III is an econometrician and professor of economics at New York University. Engle won the 2003 Nobel Prize in Economics, along with Clive W.J. Granger, for their analysis of time-series data with time-varying volatility. Time-varying volatility is the fluctuation over time of the value of financial instruments, and Engle’s discoveries of the variations
What Is the Robinson-Patman Act? The Robinson-Patman Act is a federal law passed in 1936 to outlaw price discrimination. The Robinson-Patman Act is an amendment to the 1914 Clayton Antitrust Act and is supposed to prevent “unfair” competition. Key Takeaways The Robinson-Patman Act is a federal law intended to prevent price discrimination.The law prevents distributors
