Rally - A brisk rise following a decline in the general price level of the market, or in an individual stock.

Real Estate Investment Trust (REIT) - A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages.

REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.

Equity REITs: Equity REITs invest in and own properties (thus responsible for the equity or value of their real estate assets). Their revenues come principally from their properties' rents.

Mortgage REITs: Mortgage REITs deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans.

Hybrid REITs: Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.

Record date - The date on which you must be registered as a shareholder of a company in order to receive a declared dividend or, among other things, to vote on company affairs.  

Redemption price - The price at which a bond may be redeemed before maturity, at the option of the issuing company. Redemption value also applies to the price the company must pay to call in certain types of preferred stock.  

Red herring - A registration statement filed with but not yet approved by the Securities and Exchange Commission (SEC).

Redlining - The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city neighborhoods to borrow money, gain approval for a mortgage, take out insurance or gain access to other financial services because of high default rates. In this case, the rejection does not take the individual's qualifications and creditworthiness into account.

Refinancing - Same as refunding. New securities are sold by a company and the money is used to retire existing securities. The object may be to save interest costs, extend the maturity of the loan, or both.

Registered bond - A bond that is registered on the books of the issuing company in the name of the owner. It can be transferred only when endorsed by the registered owner.

Registered competitive market maker - Members of the New York Stock Exchange who trade on the floor for their own or their firm's account and who have an obligation, when called upon by an exchange official, to narrow a quote or improve the depth of an existing quote by their own bid or offer.

Registered representative - The man or woman who serves the investor customers of a broker/dealer. In a New York Stock Exchange-member organization, a registered representative must meet the requirements of the exchange as to background and knowledge of the securities business. Also known as a financial advisor or customer's broker.

Registrar - Usually a trust company or bank charged with the responsibility of keeping record of the owners of a corporation's securities and preventing the issuance of more than the authorized amount.

Registration - Before an initial public offering may be made of new securities by a company, the securities must be registered under the Securities Act of 1933. A registration statement is filed with the SEC by the issuer. It must disclose pertinent information relating to the company's operations, securities, management and purpose of the public offering. Before a security may be admitted to dealings on a national securities exchange, it must be registered under the Securities Exchange Act of 1934. The application for registration must be filed with the exchange and the SEC by the company issuing the securities.

Regular way delivery - Unless otherwise specified, securities sold on the New York Stock Exchange are to be delivered to the buying broker by the selling broker and payment made to the selling broker by the buying broker on the third business day after the transaction. Regular way delivery for bonds is the following business day.

Regulation T - The federal regulation governing the amount of credit that may be advanced by brokers and dealers to customers for the purchase of securities.

Regulation U - The federal regulation governing the amount of credit that may be advanced by banks to customers for the purchase of listed stocks.  

Reinstatement - If a long-term care insurance policy lapses as a result of the insured person's cognitive impairment, it can usually be reinstated in most states retroactive to the date of lapse as though no lapse occurred, with no application required for reinstatement. The request for reinstatement must be made to the insurance company within six months following the date of lapse; the insurance company's requirements for cognitive impairment must be met; and all past due premiums must be paid.

REIT - See (real estate investment trust)

Remainder man - The person who receives the principal remaining in a trust account after all other required payments have been made, such as those to the beneficiary and expenses, and the trust has been dissolved.

Rescind - When the insurance company cancels a policy retroactive to its effective date, usually because of misrepresentation, fraud, or illegal procedure. Legally, it is though the policy was never issued.

Reverse Mortgage - A mortgage agreement that allows a homeowner to borrow against their home's equity and receive tax-free payments in the form of a monthly annuity. With a reverse mortgage, you remain the owner of your home just like when you had a regular mortgage. You are still responsible for paying your property taxes and homeowners insurance, and for making property repairs.

When the loan is over, you or your heirs must repay all of the payments you received plus interest. (Reputable lenders don't want your house; they want repayment.) All reverse mortgages are due and payable when the last surviving borrower dies, sells the home, or permanently moves out of the home. (Typically, a "permanent move" means that neither you nor any other co-borrower has lived in your home for one year.)

Revocable Trust - A trust in which a Grantor reserves the right to revoke or change. To protect the final wishes of the Grantor, a trust can become irrevocable upon the death of the Grantor. 

Rights - When a company wants to raise more funds by issuing additional securities, it may give its stockholders the opportunity, ahead of others, to buy the new securities in proportion to the number of shares each owns. The piece of paper evidencing this privilege is called a right. Because the additional stock is usually offered to stockholders below the current market price, rights ordinarily have a market value of their own and are actively traded. In most cases they must be exercised within a relatively short period. Failure to exercise or sell rights may result in monetary loss to the holder.

Risk Arbitrage - A broad definition for three types of arbitrage that contain an element of risk:

1) Merger and acquisition arbitrage - The simultaneous purchase of stock in a company being acquired and the sale (or short sale) of stock in the acquiring company.

2) Liquidation arbitrage - The exploitation of a difference between a company's current value and its estimated liquidation value.

3) Pairs trading - The exploitation of a difference between two very similar companies in the same industry that have historically been highly correlated. When the two company's values diverge to a historically high level you can take an offsetting position in each (e.g. go long in one and short the other) because, as history has shown, they will inevitable come to be similarly valued.

In theory true arbitrage is riskless, however, the world in which we operate offers very few of these opportunities. Despite these forms of arbitrage being somewhat risky, they are still relatively low-risk trading strategies which money managers (mainly hedge fund managers) and retail investors alike can employ.  

Rollover - A rollover occurs when a participant leaves an employer and directs the defined contribution plan to transfer the money in his account to a new plan or individual retirement account. This preserves the benefits and does not trigger any tax consequences if done in a timely manner.

Roth IRA - An Individual Retirement Account that allows taxpayers to contribute up to $2,000 per year, and to withdraw the principal and earnings totally tax-free under certain conditions. Unlike a traditional IRA, a taxpayer cannot take a tax deduction for his or her contributions to a Roth IRA plan. Unlike payments that are withdrawn tax-free from a Roth IRA plan, payments withdrawn from a traditional IRA plan are fully taxable as income.

Roth 401(k) - Like a Roth IRA, contributions will be made with after-tax dollars. While you won't get an upfront tax deduction, the account will grow tax-free, and withdrawals taken during retirement will not be subject to income tax, if you are at least 59 1/2 and you've held the account for five years or more.

Important Note: The maximum contribution limits apply to contributions to both types of 401(k) plans. In other words, you can't save $15,000 in a regular 401(k) and another $15,000 in a Roth 401(k).  

Round lot - A unit of trading or a multiple thereof. On the NYSE, the unit of trading is generally 100 shares in stocks and $1,000 or $5,000 par value in the case of bonds. In some inactive stocks, the unit of trading is 10 shares.  

Rule of 72 - A formula to determine the length of time (in years) that it will take for invested money to double at a given compound interest rate. Simply divide 72 by the interest rate to determine the number of years.