R

Glossary · PSX term

Risk tolerance.

Risk tolerance is how much loss and volatility you can handle financially and emotionally.

Definition

It depends on your goals, time horizon, income stability, and temperament, and it should shape your asset allocation. Knowing your true tolerance helps you avoid panic selling in downturns.

Worked example

A young investor with stable income may tolerate more stock-market swings than someone near retirement.

Related on PSX Clarity

Asset allocation

Diversification

More glossary terms

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Right shares give existing shareholders the option to buy additional shares, usually at a set price and ratio. Investors should review the purpose, price, and dilution effect before deciding whether to subscribe.

Return on equity

Return on equity, or ROE, shows how much profit a company generates compared with shareholder equity. It is a profitability ratio, not a guarantee of future returns.

A realized gain is profit from a position that has been sold. It matters for performance tracking and may affect tax calculations depending on rules, holding period, and investor status.

A reverse split combines several shares into one, raising the price per share without changing total value.

The record date is the cut-off day a company uses to decide who qualifies for a dividend or other action.

Rollover week is the period when expiring futures positions are closed or moved to the next contract.

Real Estate Investment Trust (REIT)

A REIT is a listed vehicle that owns or develops real estate and passes income to unit holders.

Return on assets (ROA)

ROA shows how much profit a company generates from its total assets.

The risk-free rate is the return on an investment considered to have virtually no default risk.