RAROC

RAROC definition
RAROC is defined as a ratio used to determine risk adjusted return on capital.

RAROC See Risk Adjusted Return on Capital.
Rate The charge per unit for determining the cost of insurance premiums.

RAROC = (Expected Return)/(Economic Capital)[2] or
RAROC = (Expected Return)/(Value at risk)[2] ...

Risk-Adjusted Return on Capital (RAROC)
Another measure of risk-adjusted profitability, derived as the ratio between P/L and value at risk.

See also: Market, Investment, Capital, Stock, Ratio