risk adjusted return on capital (RAROC)

Definition

RAROC. A financial measurement that allows analysts to take into account the effect of risk when comparing profitability and performance across various businesses. It is calculated by dividing the risk adjusted return (net income - expected loss from risk + income from capital) by the economic capital. Higher risk projects tend to bring higher rewards.

Reproduction of all or part of this glossary and/or this page, in any format, without written consent is prohibited. If you have questions about this dictionary please feel free to contact us feedback\@\investorguide.com

Popular 'Earnings' Terms

EBITDA
operating income
P/E ratio
market capitalization
dividend

income
EBITDA margin
EBIDTA
retained earnings
accretive

risk adjusted return on capital (RAROC) in the news

Enter your email address to get our free Term of the Day newsletter!

Tools

risk adjusted return on capital (RAROC) is ...

... part of the Earnings subject.

Nearby Terms

ring
rising bottoms
rising prices
risk
risk adjusted return
risk adjusted return on capital (RAROC)
risk arbitrage
risk capital
risk category
risk disclosure document
risk management