Risk-adjusted return on capital (RAROC) is a risk-based profitability measurement framework for analysing risk-adjusted financial performance and providing a consistent view of profitability across businesses. The concept was developed by Bankers Trust and principal designer Dan Borge in the late 1970s. Note, however, that more and more return on risk adjusted capital (RORAC) is used as a measure, whereby the risk adjustment of Capital is based on the capital adequacy guidelines as outlined by the Basel Committee, currently Basel III.
Read more about Risk-adjusted Return On Capital: Basic Formula
Famous quotes containing the words return and/or capital:
“I believe in the brotherhood of man, all men, but I don’t believe in brotherhood with anybody who doesn’t want brotherhood with me. I believe in treating people right, but I’m not going to waste my time trying to treat somebody right who doesn’t know how to return the treatment.”
—Malcolm X (1925–1965)
“There exists, between people in love, a kind of capital held by each. This is not just a stock of affects or pleasure, but also the possibility of playing double or quits with the share you hold in the other’s heart.”
—Jean Baudrillard (b. 1929)