What Is a Rate-Improvement Mortgage? A rate-improvement mortgage is a variation of a fixed-rate mortgage contract. It includes a clause permitting a borrower a one-time option to reduce their home loan interest rate when interest rates drop below the initially-contracted rate. This type of mortgage is a good option for property buyers if interest rates
What Is Rate Level Risk? Rate level risk is the possibility that an interest-bearing asset will lose value if market interest rates increase above its coupon rate. Key Takeaways Rate level risk is the risk of an interest-bearing asset losing value in the case that market interest rates rise above its coupon rate.Interest rate risk
What Is Rate on Line? Rate on line (ROL) is the ratio of premium paid to loss recoverable in a reinsurance contract. Simply put, ROL represents how much money an insurer must commit in order to obtain reinsurance coverage. A high ROL signals that the insurer must pay more for coverage, while a lower ROL
What Is the Rate of Adoption? The rate of adoption is the pace at which a new technology is acquired and used by the public. This rate can be represented by the number of members of a society who start using a new technology or innovation during a specific period of time. The rate of
What Is Rate of Change (ROC)? The rate of change (ROC) is the speed at which a variable changes over a specific period of time. ROC is often used when speaking about momentum, and it can generally be expressed as a ratio between a change in one variable relative to a corresponding change in another;
What Is a Rate of Return (RoR)? A rate of return (RoR) is the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment’s initial cost. When calculating the rate of return, you are determining the percentage change from the beginning of the period until the
What Is Rate of Return Regulation? Rate of return regulation is a form of price setting regulation where governments determine the fair price which is allowed to be charged by a monopoly. It is meant to protect customers from being charged higher prices due to the monopoly’s power while still allowing the monopoly to cover
DEFINITION of Ratings Service Ratings range from AAA or Aaa (the highest) to C or D, which represents a company that has already defaulted. BREAKING DOWN Ratings Service While fixed income and bonds investments can inject a measure of diversification in a common stock portfolio, these vehicles can be complicated, with variant risk profiles. A standardized ratings
What Is Ratio Analysis? Ratio analysis is a quantitative method of gaining insight into a company’s liquidity, operational efficiency, and profitability by studying its financial statements such as the balance sheet and income statement. Ratio analysis is a cornerstone of fundamental equity analysis. Key Takeaways Ratio analysis compares line-item data from a company’s financial statements
What Is Rational Behavior? Rational behavior refers to a decision-making process that is based on making choices that result in the optimal level of benefit or utility for an individual. The assumption of rational behavior implies that people would rather take actions that benefit them versus actions that are neutral or harm them. Most classical
