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R-squared is a statistical measurement that determines the proportion of a security's return, or the return on a specific portfolio of securities, that can be explained by variations in the stock market, as measured by a benchmark index.
For example, an r-squared of 0.08 shows that 80% of a security's return is the result of changes in the market - specifically that 80% of its gains are due to market gains and 80% of its losses are due to market losses. The other 20% are the result of factors particular to the security itself.
- Browse Related Terms: Consensus recommendation, index, Inflation rate, Overvaluation, R-squared, Real rate of return, Russell 1000 Index, Russell 2000 Index, screen, Standard deviation
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A radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.
A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses.
- Browse Related Terms: Asbestos, Building Code, Finish, General Contractor, Historic Fabric, Manufactured home, Mobile home, Original appearance, radon
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A horizontal sash member.
- Browse Related Terms: Casement, Details, Double hung, Frame, Glazing Bar, Gothic Sash, Meeting rail, operation, Parting strip, Rail, Sash, Segmental or Curved-Head Window, Tracery
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A rally is a significant short-term recovery in the price of a stock or commodity, or of a market in general, after a period of decline or sluggishness.
Stocks that make a particularly strong recovery in a particular sector or in the market as a whole are often said to be leading the rally, a reference to the term's origins in combat, where an officer would lead his rallying troops back into battle. While a rally may signal the beginning of a bull market, it doesn't necessarily do so.
- Browse Related Terms: Advance-decline (A-D) line, Advancer, Decliner, Gainer, Loser, Rally, Sell-off
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The random walk theory holds that it is futile to try to predict changes in stock prices.
Advocates of the theory base their assertion on the belief that stock prices react to information as it becomes known, and that, because of the randomness of this information, prices themselves change as randomly as the path of a wandering person's walk.
This theory stands in opposition to technical analysis, whose practitioners believe you can predict future stock behavior based on statistical patterns of prior performance.
- Browse Related Terms: Behavioral finance, Cornering the market, Monte Carlo simulation, Oversold, Random walk theory, Risk-adjusted performance, Sharpe ratio, Stochastic modeling, Technical analysis
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Ranking is a method of assigning a value to an investment in relation to comparable investments by using a scale.
The scale might be a straightforward numerical (1 to 5) or alphabetical (A to E) system, or one that also uses stars, checks, or some other icon to convey the evaluation.
Research firms and individual analysts typically establish and publish their criteria - though not their methodology - for establishing their rankings.
These criteria, which also differ by investment type, may include quantitative information such as past earnings, price trends, and the issuing company's financial fundamentals, or more qualitative assessments, such as the state of the marketplace.
Ranking can be a useful tool in evaluating potential investments or in reviewing your current portfolio. Before depending on a ranking, though, you'll want to understand how it has been derived and how accurate the system for assigning the values has been over time.
- Browse Related Terms: Bottom-up investing, Fundamental analysis, Good will, intrinsic value, Present value, Qualitative analysis, Quantitative analysis, Ranking
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A limit on an ARM on how much the interest rate or mortgage payment may change. Rate caps limit how much the interest rates can rise or fall on the adjustment dates and over the life of the loan.
See: cap.
The limit on the amount an interest rate on an ARM can increase or decrease during an adjustment period.
- Browse Related Terms: Adjustable-Rate Mortgage (ARM), annual cap, ARM, CAP, interest cap, Life Cap, life-of-loan cap, Lifetime Cap, Payment Cap, Rate Cap
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The period of time that a mortgage company will guarantee a loan's interest rate, usually 30 or 60 days. Longer rate locks are sometimes available at higher costs.
State of Maine, Department of Professional and Financial Regulation - Cite This Source - This Definition- Browse Related Terms: Balloon Payment, Conventional Mortgage, Department of Veterans Affairs (VA), Federal Housing Authority (FHA), floating, Loan Term, Locking, Maine State Housing Authority (MSHA), Pest Inspection, Rate Lock, Rescission, Rural Development (RD), Underwriting
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An agreement in which a lender "locks in" or guarantees an interest rate for a specified period of time prior to closing. See also "Lock-in"
A commitment by a lender to a borrower guaranteeing a specific interest rate over a period of time at a set cost.
- Browse Related Terms: Balloon Loan or Mortgage, Budget, certificate of deposit, commitment fee, Lock-In, Lock-in agreement, Lock-in Period, Lock-In Rate, Mortgage Note, Rate Lock, Yield
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Rate of return is income you collect on an investment expressed as a percentage of the investment's purchase price. With a common stock, the rate of return is dividend yield, or your annual dividend divided by the price you paid for the stock.
However, the term is also used to mean percentage return, which is a stock's total return - dividend plus change in value - divided by the investment amount.
With a bond, rate of return is the current yield, or your annual interest income divided by the price you paid for the bond. For example, if you paid $900 for a bond with a par value of $1,000 that pays 6% interest, your rate of return is $60 divided by $900, or 6.67%.
- Browse Related Terms: Average annual yield, Basis point, Current return, current yield, Equivalent taxable yield, Nominal yield, Rate of return, Spread, Yield, Yield to maturity (YTM)
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The price data take the form of a "rate spread." Lenders must report the spread (difference) between the annual percentage rate (APR) on a loan and the rate on Treasury securities of comparable maturity - but only for loans with spreads above designated thresholds. So rate spreads are reported for some, but not all, reported home loans. The rate spread, along with Lien Status and HOEPA help interpret the pricing data.
- Browse Related Terms: Collateral, creditor, Equity stripping, Home Equity Line of Credit (HELOC), Home Ownership and Equity Protection Act (HOEPA), interest, Interest rate, Loan modification activities, Principal, Rate Spread, Servicemen’s Readjustment Act, Truth-In-Lending Act (TILA)
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A contract that shows both you and the seller of the house have agreed to your offer. This offer may include sales contingencies, such as obtaining a mortgage of a certain type and rate, getting an acceptable inspection, making repairs, closing by a certain date, etc.
- Browse Related Terms: As-is Condition, Back to Back Escrow, Concession, Contingency, Counter Offer, Deposit (Earnest Money), derivative, Earnest Money Deposit, escape clause, Homeowner's Warranty (HOW), Purchase and Sale Agreement, Purchase Offer, Ratified Sales Contract, Rehabilitation, Right of First Refusal, walk-through, Walkthrough
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Rating means evaluating a company, security, or investment product to determine how well it meets a specific set of objective criteria.
For example, a bond issue may be rated along a spectrum from highest quality investment grade to junk, or from AAA to D.
Rating typically affects the interest rate a fixed-income security must pay to attract investors, forcing lower-rated bond issuers to pay higher rates. Other investors may shun low-rated investments entirely, unwilling to take the risk that the issuer might default. However, ratings are not infallible, even in industries, such as insurance, that are regularly scrutinized.
Rating differs from ranking, which assigns the relative standing of two or more similar items in relation to each other.
- Browse Related Terms: Bond fund, Bond rating, Currency, Duration, Fallen angel, Gold standard, High-yield bond, Investment grade, Junk bond, Moody's Investors Service, Inc., Rating, Rating service, Risk premium
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A rating service, such as A.M. Best, Moody's Investors Service, or Standard & Poor's, evaluates bond issuers to determine the level of risk they pose to would-be investors.
Though each rating service focuses on somewhat different criteria in making its evaluation, the assessments tend to agree on which investments pose the least default risk and which pose the most.
These rating services also evaluate insurance companies, including those offering fixed annuities and life insurance, in terms of how likely a provider is to meet its financial obligations to policyholders.
- Browse Related Terms: Bond fund, Bond rating, Currency, Duration, Fallen angel, Gold standard, High-yield bond, Investment grade, Junk bond, Moody's Investors Service, Inc., Rating, Rating service, Risk premium
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Denotes the relationship of items within and between comparisons of balance sheet items with profit-and-loss items; operating ratios are those derived from comparisons of items of income and expense.
- Browse Related Terms: Accounts Payable, Accounts Receivable, Bank Reconciliation, Corporation, Hawaii Capital Loan Program (HCLP), Market, Marketing, Obligations, Partnership, Ratio, Return on Investments (ROI), Services Corps of Retired Executives (SCORE), Subchapter "S" Corporation
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Typically includes residential property (e.g., homes, apartment buildings, hotels), commercial property (e.g., office buildings, business sites, shopping malls), and land held for agricultural use or mineral exploration (e.g., vacant lots are included if held for the production of income such as appreciation in value).
- Browse Related Terms: Blind pool, Hard assets, Hedge fund, Limited partner, Limited partnership, Passive income, Passive losses, Private equity, Real Estate, Venture capital (VC)
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A term that is generally synonymous with real property. See also "property."
- Browse Related Terms: Appraised Value, Appreciation, Cloud On The Title, Comparables, Comparative Market Analysis (COMPS), Depreciation, Encroachment, Eviction, Fire insurance, Grantee, Grantor, income approach to value, Loan-to-value ratio (LTV), Real Estate, Real estate tax, Secured Loan, security, Single-Family Properties, Soft Second Loan, Termite Inspection
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An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.
- Browse Related Terms: American Society of Home Inspectors, Broker, Closing Date, Commission, Exclusive Listing, FSBO (For Sale by Owner), key lot, Listing Agreement, Multiple Listing Service (MLS), Open House, Real Estate Agent, Real Estate Professional, REALTOR®, Savings and loan association (S&L), Take out loan, Trade Equity, Transfer Taxes
A mutual fund that owns real estate, often commercial properties.
- Browse Related Terms: balanced funds, Bond fund, custodian, dividend fund, equity fund, index fund, International fund, investment fund, investment manager, mortgage fund, real estate fund, small cap fund, specialty fund
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A real estate trust which sells shares of ownership and must invest in real estate or mortgages. If it meets certain requirements, it is exempt from corporate income tax. It distributes a minimum of 95 percent of its income to its shareholders.
- Browse Related Terms: Blanket mortgage, Investment trust, Lender, Mortgagor, Real Estate Investment Trust (R.E.I.T.), Tax credit, Tax depreciation, Tax relief, Title Company
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Managed diversified portfolios of real estate and mortgages. REITs are usually publicly traded like mutual funds and qualify as excepted investment funds (EIF).
REITs are publicly traded companies that pool investors' capital to invest in a variety of real estate ventures, such as apartment and office buildings, shopping centers, medical facilities, industrial buildings, and hotels.
After an REIT has raised its investment capital, it trades on a stock market just as a closed-end mutual fund does.
There are three types of REITs: Equity REITs buy properties that produce income. Mortgage REITs invest in real estate loans. Hybrid REITs usually make both types of investments.
All three are income-producing investments, and by law 90% of a REIT's taxable income must be distributed to investors. That means the yields on REITs may be higher than on other equity investments.
- Browse Related Terms: Contrarian, equity fund, Global fund, Growth and income fund, income fund, International fund, Investment objective, Portfolio turnover, Prospectus, Real estate investment trust (REIT), Tax-efficient funds, Transparency, Turnover ratio, Value fund, Vulture fund, World fund
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A security representing an interest in a trust having multiple classes of securities. The securities of each class entitle investors to cash payments structured differently from the payments on the underlying mortgages.
- Browse Related Terms: bond, Callable Debt, Debt security, Deferred payments, Duration, Guaranty Fee, Medium Term Notes, Mortgage-Backed Security (MBS), Real Estate Mortgage Investment Conduit (REMIC), Stripped MBS (SMBS)