InvestorWords.com
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.
Recommended Articles from InvestorGuide.com
Related Videos
Featured Advertiser
Get our free Term of the Day newsletter!
Nearby Terms
- rising prices
- rising screen
- risk
- risk adjusted rate of return
- risk adjusted return
- risk adjusted return on capital (RAROC)
- risk analysis
- risk and return
- risk appetite
- risk arbitrage
- risk asset ratio



