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Return On Risk Adjusted Capital

Return on Risk-Adjusted Capital (RORAC)


Return on Risk-Adjusted Capital (RORAC) — a target return on equity (ROE) measure in which the denominator is adjusted depending on the risk associated with the instrument or project. This is a term used in the financial services industry and in enterprise risk management (ERM). In the insurance industry, risk-adjusted return on capital (RAROC) is the term commonly used.

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