required rate of return
A term used in evaluating business investments. It represents the targeted rate that a company needs to earn.
required rate of return
The rate of return below which an investment is not worth making.
required rate of return
return required by investors before they will commit money to an investment at a given level of risk. Unless the expected return exceeds the required return, an investment is unacceptable.
Market RRR (required rate of return) Schedule
A line that indicates the minimum return required by investors at each level of investment risk. The schedule begins at the risk-free interest rate and rises as risk increases.
Market RRR (required rate of return) Schedule
Definition: [crh] A line that indicates the minimum return required by investors at each level of Definition: "investment risk.
REQUIRED RATE of RETURN (ROR): The minimum expected rate of return necessary to induce an investor to purchase a security.
RESISTANCE LEVEL: A price range at which a technician expects a significant increase in the supply of a stock.
The required rate of return on investment is a gravitational force that pulls stock values down. ...
Required Rate Of Return
Return that an investor requires before they are willing to earmark money for an investment that has a certain risk level. The expected return must be greater than the required return for the investment to be acceptable.
Required Rate of Return (business term)
Cutoff Point (finance term)
Oar
Financial Management Rate of Return (FMRR) (business term)
Pretax Rate of Return (business term)
Basic Rate
Accounting Rate of Return (business term) ...
1) Required rate of return on the firm's assets (Ra)
2) Cost of debt of the firm (Rd)
3) Debt/Equity ratio of the firm (D/E)
If you recall the tutorial on Weighted Average Cost of Capital (WACC), the formula for WACC is: ...
The required rate of return for an investment of 100% equity.
Definition 2.
The return that stockholders require for a company. The traditional formula is the dividend capitalization model: ...
The required rate of return is the cost of capital for the security being valued: so if you are valuing shares it is the cost of equity capital.
The required rate of return on equity increases as the firm's debt-equity ratio increases.
A federal Act shielding employers from liability if they have made
a good-faith effort to verify a new employee's identity and employment eligibility.
See: Required Rate Of Return; Return
EFP (Exchange for Physical Program)
A trading technique involving index futures and the stocks composing the index. Complex computer programs show deviations in the spread between the futures and the stocks.
Risk and Required Rate of Return. Now that the relationship between risk and multiples has been established, the risk must be quantified so that it can be reflected in a multiple.
Market RRR (required rate of return) Schedule
Market sectors
Market segmentation theory or preferred habitat theory ...
Once the expected/required rate of return, E(Ri), is calculated using CAPM, ...
Cost of equity
The required rate of return for an investment of 100% equity.
Cost of funds
Interest rate associated with borrowing money.
base interest rate The base interest rate is the minimum required rate of return acceptable to... base period A specific time period used as a benchmark in measuring financial or economic data.
Related: Systematic risk Market RRR (required rate of return) Schedule A line that indicates the minimum return required by investors at each level of investment risk.
[FDIC] asset pricing model A model for determining the required rate of return on an asset. [Harvey] A model, such as the Capital Asset Pricing Model (CAPM), that determines the required rate of return on a particular asset.
Asset pricing model A model for determining the required rate of return on an asset. Asset substitution A firm's investing in assets that are riskier than those that the debtholders expected.
Required rate of return [r]: A stipulated minimum acceptable value of a project's internal rate of return that is sometimes used as an alternative to the net present value criterion for investment appraisal or cost-benefit analysis. [e] ...
For purposes of this illustration, assume that the company's cost of capital (or minimum required rate of return) is 10%. The accompanying table reveals calculations of the residual income for each segment.
The hurdle rate is the required rate of return on investment appraisal, above which an investment project is worth pursuing.
The CAPM determines the required rate of return, and the Jensen index helps investors see if the calculation yielded expected results.
The discount rate represents the required rate of return to make a business acquisition worth while. The idea is to look at a business purchase as an investment decision.
The Required Rate of Return that must be paid or received by all of the investors with respect to a company's securities. Used as a hurdle rate for capital.
Hurdle rate - Used in capital budgeting, it means the required rate of return of a discounted cash flow analysis. If the expected rate of return on a particular investment is below that of the hurdle rate, then the project will not begun.
The bank discount rate is the required rate of return of a safe investment guaranteed by the bank.
How The U.S. Government Formulates Monetary Policy
How Bond Market Pricing Works
Digging Into The Dividend Discount Model
Be Mortgage-Free Faster ...
calculate price based on the a required rate of return on investment, or rate of return on sales
Profit maximization
determining the optimum price and quantity
the totals approach
the marginal approach ...
HURDLE RATE - a term used in the budgeting of capital expenditures meaning the REQUIRED RATE OF RETURN ...
HURRICANE BOND - A form of Catastrophe Bond (q.v.), where the catastrophe is a hurricane. (Source: Soph...
rate of return (usually on an after-tax basis) required by the management of the firm to be earned by a capital expenditure. In making this determination, the level of risk is considered. The higher the risk, the higher the required rate of return.
The difference between the required rate of return on a riskless asset with the same expected life.
ROE:
Return on equity.
Net Present Value - a value derived from discounting cash flows of a project at a required rate of return. If the value is greater than zero, then the project is desirable otherwise it isn't! ...
The APT implies that multiple risk factors determine an asset's required rate of return. In contrast, the Capital Asset Pricing Model (CAPM) uses a single risk factor (beta) to determine required rates of return.
The present value of a firm's expected future net cash flows discounted by the required rate of return.
Inventory ...
An approach that assumes dividends grow at a constant rate in perpetuity. The value of the stock equals next year's dividends divided by the difference between the required rate of return and the assumed constant growth rate in dividends.
Growth Stocks Stocks of companies that have an opportunity to invest in projects that earn more that the required rate of return.
- H -
Hurdle Rate The minimum required return on a project.
Net present value of growth opportunities. Can be calculated as: NPVGO = P0 - EPS / r where P0 is the current share price, EPS is earnings per share and r is the required rate of return.
Popular terms ...
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the required rate of return.
In a commonsense way, the impact of FIIs upon the cost of equity capital may be visualized by asking what stock prices would be if there were no FIIs operating in India. FII investment reduces the required rate of return for equity, ...
of Capitalization: The Inwood Method of Capitalization is a method of capitalizing net income to determine the value of the property. The method assumes the creation of a sinking fund that earns interest at the investor's required rate of return.
The cutoff point is very subjective and will be based on the personal characteristics of the individual investor. Some examples of personal characteristics that may determine the cutoff point include the investor's required rate of return and ...
It is assumed that a business entity issues a dividend with a current value growing at a constant rate. The required rate of return is set constant for the stock, equaling the cost of the equity.
Required Rate of Return (RRR) The minimum expected yield by investors require in order to select a particular investment.
The value of the stock equals next year's dividends divided by the difference between the required rate of return and the assumed constant growth rate in dividends.
 See also: Limit Order, LIBOR, Risk management, Irrevocable trust, Revocable trust
  
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