Rate of Return - Percentage appreciation in market value for an investment security or security portfolio.

Recapitalization: The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility. Recapitalization can be an alternative exit strategy for venture capitalists and leveraged buyout sponsors. (See Exit Strategy and Leveraged Buyout)

Reconfirmation: The act a broker/dealer makes with an investor to confirm a transaction.

Red Herring: The common name for a preliminary prospectus, due to the red SEC required legend on the cover. (See Prospectus)

Redeemable Preferred Stock: Redeemable preferred stock, also known as exploding preferred, at the holder's option after (typically) five years, which in turn gives the holders (potentially converting to creditors) leverage to induce the company to arrange a liquidity event. The threat of creditor status can move the founders off the dime if a liquidity event is not occurring with sufficient rapidity.

Redemption: Partial or whole liquidation of interests in an investment fund.

Redemption fee - Fee charged upon a voluntary redemption from an investment vehicle.

Redemption notice period - Required notification period of an intended redemption request. Notification is usually required in writing.

Redemption: The right or obligation of a company to repurchase its own shares.

Regional: An investment strategy in which investments are focused on specific regions of the world, e.g., Latin America, Pacific Rim, and Europe.

Registration Rights: The right to require that a company register restricted shares. Demand Registered Rights enable the shareholder to request registration at any time, while Piggy Back Registration Rights enable the shareholder to request that the company register his or her shares when the company files a registration statement (for a public offering with the SEC).

Registration: The SEC's review process of all securities intended to be sold to the public. The SEC requires that a registration statement be filed in conjunction with any public securities offering. This document includes operational and financial information about the company, the management and the purpose of the offering. The registration statement and the prospectus are often referred to interchangeably. Technically, the SEC does not "approve" the disclosures in prospectuses.

Regulation A: SEC provision for simplified registration for small issues of securities. A Reg. A issue may require a shorter prospectus and carries lesser liability for directors and officers for misleading statements. The conditional small issues securities exemption of the Securities Act of 1933 is allowed if the offering is a maximum of $5,000,000 U.S. Dollars.

Regulation C: The regulation that outlines registration requirements for Securities Act of 1933.

Regulation D: Regulation D was adopted by the SEC under the provision of the Securities Act of 1933. Under regulation D, many issuances of equity securities are exempt from registration with the Securities and Exchange Commission. This regulation saves private investment partnerships a significant amount of time and money in the process of raising funds

Regulation D Offering: (See Private Placement)

Regulation D: Regulation D, is the rule (Reg. D is a "regulation" comprising a series of "rules") that allow for the issuance and sale of securities to purchasers if they qualify as accredited investors.

Regulation S: The rules relating to Offers and Sales made outside the US without SEC Registration.

Regulation S-B: Reg. S-B of the Securities Act of 1933 governs the Integrated Disclosure System for Small Business Issuers.

Regulation S-K: The Standard Instructions for Filing Forms Under Securities Act of 1933, Securities Exchange Act of 1934 and Energy Policy and Conservation Act of 1975.

Regulation S-X: The regulation that governs the requirements for financial statements under the Securities Act of 1933, and the Securities Exchange Act of 1934.

REIT: Congress created Real Estate Investment Trusts in 1960. A REIT is a company dedicated to owning and usually operating income producing real estate such as offices, warehouses, apartments and shopping centers. In order to qualify as a REIT an entity is legally required to pay virtually all of its taxable income to its shareholders every year.

Reorganization or Corporate Reorganization: Reorganizations are significant changes in the equity base of a company such as converting all outstanding shares to Common Stock, or combining outstanding shares into a smaller number of shares (a reverse split). A Reorganization is frequently done when a company has already had a few rounds of venture financing but has not been able to successfully increase the value of the company and therefore is doing a Down Round that is essentially a restart of the company.

Restricted Securities: Public securities that are not freely tradable due to SEC regulations. (See Securities and Exchange Commission)

Restricted Shares: Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration, or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares, after which time they may sell less than 1% of their outstanding shares each quarter. For affiliates, there is a two-year holding period.

Return/Beta: The annual return divided by the estimated beta of the manager or index. It indicates how much return has been generated per unit of risk as defined by beta.

Return/Standard Deviation: The annual return divided by annualized standard deviation. It indicates how much return has been generated per unit of risk as defined by standard deviation.

Right of First Refusal: The right of first refusal gives the holder the right to meet any other offer before the proposed contract is accepted.

Rights Offering: Issuance of "rights" to current shareholders allowing them to purchase additional shares, usually at a discount to market price. Shareholders who do not exercise these rights are usually diluted by the offering. Rights are often transferable, allowing the holder to sell them on the open market to others who may wish to exercise them. Rights offerings are particularly common to closed-end funds, which cannot otherwise issue additional ordinary shares.

Risk: Exposure to uncertain change, upside (positive change) or downside (negative change). There are many types of risk associated with investments (e.g., market risk, political risk). There are also many statistical measures, such as standard deviation, used to understand and estimate risk associated with investments.

Risk Arbitrage - An investment strategy whereby a long position is taken in the stock of a company being acquired in a merger or takeover and a simultaneous short position is taken in the stock of the acquiring company. Returns are produced from the inequality of stock prices from announcement date of the merger until the transaction closes. Risk is often reduced by avoiding hostile takeovers and investing only in deals that are announced. Medium volatility may be expected.

Risk Premium: The extra rate of return required to attract investors to an asset due to the incremental risk incurred from investing in it.

Risk: The chance of loss on an investment due to many factors including inflation, interest rates, default, politics, foreign exchange, call provisions, etc. In Private Equity, risks are outlined in the Risk Factors section of the Placement Memorandum.

Risk-Adjusted Return: Investment performance adjusted for the level of risk that the strategy is exposed to. Usually risk is measured by standard deviation or the volatility that is demonstrated by the strategy. Typically, investments showing high return will have an increased level of volatility or a higher standard deviation.

Rolling Rate of Return: The average return of a rolling performance period.

R-Squared (Coefficient of Determination): Is a measure of how well a regression line fits the data. It indicates the percent of variation in the data that is explained by the regression line. R-Squared can vary between 0 and 1, where 1 indicates that 100% of the variation in the investment returns (dependent variable) is explained by the regression for the period measured.

Rule 144: Rule 144 provides for the sale of restricted stock and control stock. Filing with the SEC is required prior to selling restricted and control stock, and the number of shares that may be sold is limited.

Rule 144A: A safe harbor exemption from the registration requirements of Section 5 of the 1933 Act for resales of certain restricted securities to qualified institutional buyers, which are commonly referred to as "QIBs." In particular, Rule 144A affords safe harbor treatment for reoffers or resales to QIBs - by persons other than issuers - of securities of domestic and foreign issuers that are not listed on a U.S. securities exchange or quoted on a U.S. automated inter-dealer quotation system. Rule 144A provides that reoffers and resales in compliance with the rule are not "distributions" and that the reseller is therefore not an "underwriter" within the meaning of Section 2(a)(11) of the 1933 Act. If the reseller is not the issuer or a dealer, it can rely on the exemption provided by Section 4(1) of the 1933 Act. If the reseller is a dealer, it can rely on the exemption provided by Section 4(3) of the 1933 Act.

Rule 147: Provides an exemption from the registration requirements of the Securities Act of 1933 for intrastate offerings, if certain requirements are met. One requirement is that 100% of the purchasers must be from within one state.

Rule 501: Rule 501 of Regulation D defines Accredited Investor.

Rule 505: Rule 505 of Regulation D is an exemption for limited offers and sales of securities not exceeding $5,000,000.

Rule 506: Rule 506 of Regulation D is considered a "safe harbor" for the private offering exemption of Section 4(2) of the Securities Act of 1933. Companies using the Rule 506 exemption can raise an unlimited amount of money if they meet certain exemptions.

Russell 1000® Index - The Russell 1000 Index consists of the 1,000 largest companies in the Russell 3000 Index, representing 89 percent of the total market capitalization of the Russell 3000.

Russell 2000® Growth Index - The Russell 2000 Growth Index contains those Russell 2000 securities with a greater-than-average growth orientation. Securities in this index generally have higher price-to-book and price-to-earnings ratios than those in the Russell 2000 Value Index.

Russell 2000® Small Stock Index - The Russell 2000 Small Stock Index is comprised of the 2000 smallest securities in the Russell 3000 Index, and includes reinvestment of dividends. It represents approximately 7 percent of the Russell 3000.

Russell 2000® Value Index - The Russell 2000 Value Index contains those Russell 2000 securities with a less-than-average growth orientation. Securities in this index generally have lower price-to-book and price-to-earnings ratios than those in the Russell 2000 Growth Index.

Russell 3000® Index - Measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.