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ILC Glossary of Financial Terms: R

From Rally to Risk

Rally:

A brisk rise in the general price level of the market or in an individual stock.

Reaction:

A temporary price weakness in a security following a price upswing.

Real Estate Investment Trust (REIT):

An investment vehicle that invests funds on behalf of its investors in real estate-related investments such as construction loans, mortgages, land and real estate company securities.

Real Interest Rate:

The nominal rate of interest minus the percentage change in the Consumer Price Index, or the rate of inflation.

Record Date:

The day a company sets as the last day people can buy stock and receive such things as dividends or rights. These people are called stockholders of record.

Red Herring:

A preliminary prospectus, so-called because certain information is printed in red ink around the border of the front page. It does not contain all the information found in the final prospectus. Its purpose is to ascertain the extent of public interest in an issue while it is being reviewed by a securities commission.

Redemption:

The purchase of securities by the issuing company from the holder, at a time and price stipulated in the original terms of the securities. The redemption price is the price at which debt securities or preferred shares may be redeemed at the option of the issuing company.

Refinancing or Refunding:

When new securities are sold by a government or a company and the money is used to pay off existing loans. The object may be to save interest costs, extend the maturity of the loan, or both.

Registered Pension Plan (RPP):

A RPP is a trust registered with Revenue Canada and established by a company to provide pension benefits for its employees when they retire. Both employee and employer contributions to the plan are tax deductible.

Registered Representative:

Now more commonly referred to as an investment advisor. This is a person employed by an investment dealer who provides investment advice to clients and executes trades on their behalf in securities and other investment products. Investment advisors must attain set educational qualifications, follow certain rules and regulations and be registered by the securities commission of the province in which he or she works.

Registered Retirement Income Fund (RRIF):

A RRIF is a tax deferral vehicle available to Registered Retirement Savings Plan (RRSP) holders who de-register their plans. The plan holder invests the withdrawn RRSP funds in the RRIF and each year must withdraw and pay income tax on a set fraction of the total assets in the fund.

Registered Retirement Savings Plan (RRSP) :

A vehicle available to individuals to defer tax on a specified amount of money to be used for retirement. The holder invests money in one or more of a variety of investment vehicles which are held in trust under the plan. Income tax is deferred until the money (the amount originally deposited plus any interest or dividends made on that money) is withdrawn at retirement. RRSPs can be converted into Registered Retirement Income Funds.

Registered Security:

A security recorded on the books of a company in the name of the owner. It can only be transferred when the securities certificate is endorsed in that name and the certificate is forwarded to the transfer agent. Registered debt securities may be registered as to principal only or fully registered. In the case of fully registered debt securities, interest is paid by cheque rather than by coupons attached to the certificate.

Registered Tax Deferral Savings Plans:

Government-approved savings plans such as Registered Pension Plans, Registered Retirement Savings Plans and Registered Retirement Income Funds, in which funds contributed by individuals are tax-deductible within certain limits and investment earnings accumulate in the plans on a tax-deferred basis until de-registration or maturity of the plans.

Registrar:

Usually a trust company appointed by a company to manage the issuance and registration of securities certificates.

Registration:

1. The process of securities registration involves filing a prospectus with the securities administrators as required under the Securities Act of each province in which the securities will be offered. 2. Investment dealers and sales staff involved in the investment business must be registered with the applicable self-regulatory organization. Before registration is allowed, basic standards must be met, such as minimum capital requirements for a firm and minimum educational qualifications for personnel.

Reporting Issuer:

A corporation that has issued and outstanding securities held by the public and is subject to the continuous disclosure requirements of securities administrators.

Repurchase Agreements:

An agreement between a seller and a buyer, usually in government securities, in which the seller agrees to buy back the security at a later date.

Resistance:

Used in technical analysis to describe a price level that a security has difficulty reaching.

Restricted Shares:

Shares that have limited voting rights or in some cases, no voting rights. These shares participate in a company's earnings and assets in liquidation as common shares do and are sometimes referred to as restricted common shares. Restricted shares may not command the same market price as voting common shares of the same company since they do not have voting rights.

Retained Earnings:

The cumulative total portion of annual earnings retained by a company after payment of all expenses and dividends. Can be considered money that the company puts back into its business for expansion, etc.

Retractable:

A feature which can be included in a new debt issue or preferred share which grants the holder the option, under specified conditions, to redeem the security on a stated date. This date would be prior to maturity in the case of a debt issue.

Return:

The income earned or a capital gain made on an investment.

Reverse Split:

The exchange of a greater number of a company's shares for a lesser number. For example, exchanging three shares for one. This results in a higher share price and less shares outstanding. This is also called a consolidation or a negative split.

Right:

The temporary privilege granted to a company's existing common shareholders to acquire additional common shares directly from the company at a stated price. The price is usually at a discount to the market price of the common stock on the day the rights are issued, and the rights only are good within a specified time period. Rights of listed companies trade on stock exchanges from the ex rights date until their expiry, so holders can either exercise the rights or they can sell them.

Right of Rescission:

The right of a purchaser of a new issue to withdraw from the purchase agreement within the specific province's applicable time limits if the prospectus contained an untrue statement or omitted a material fact.

Right of Withdrawal:

The right of a purchaser of a new issue to withdraw from the purchase agreement within two business days after receiving the prospectus.

Risk:

The future chance or probability of loss.