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risk adjusted

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risk adjusted
Of or relating to a variable, such as the return on an investment, that has been altered in order to account for the differences in risk among variables of the same type. For example, financial managers adjust expected returns on various investment projects for risk in order to make them comparable.


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Meanwhile, the RAROC or risk adjusted return of capital, is used to analyse the risk-adjusted financial performance of an enterprise and to provide a view of profitability.
Risk adjusted return on capital (RAROC)--a measure of profitability of a business activity based on whether its return on capital is above or below its equity hurdle rate--is 20 percent.
Market, liquidity and credit risk are inextricably linked in delivering the highest risk adjusted return on capital (RAROC).
 
 
 
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