Reserves
The constitute part of the capital of a company, other than the share capital. Reserves arise out of the retained profit and share premium, if any, charged. These are surpluses not distributed among the shareholders. Certain kinds of reserve cannot be distributed by way of bonus, or subsequent dividend, e.g. share premium account or capital redemption reserve. Surplus are earmarked for special purposes, such as reserves for obsolescence of plant.
Return on Capital Employed or ROCE
it is the Earned divided by capital employed multiplied by 100 to get the percentage.
Revenue Items
These are expenses incurred, and income earned in the course of carrying on a business and are shown in the income statement of a company as Revenue Account.
Rising Bottoms
it is a technical chart pattern which shows a rising trend in the low prices of shares in successive curves of high and low. If this trend is accompanied by a rising trend in the tops in successive curves of highs, the trend is interpreted to be bullish.
Risk Average
Intelligent investors will naturally choose an investment with the least risk, assuming a certain return. The higher the risk the more they will except as a return. A well – planned portfolio of shares mixes the two elements of risk and return judiciously.
Roll – Over CD
A certificate of deposit in which the maturity term is divided into shorter periods. Also called Roly – poly CD.
Rubber Cheque
A cheque that has bounced, because the issuer’s account has insufficient fund.
Rule of 72
A most useful formula for calculating the number of years an investment will take at a compound rate of interest to double. Divide 72 by the compound rate of interest and you get the period of time. Or again, if you know the period of time it takes an investment to double, divide 72 by the number of years and you will get the compound interest rate.