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Risk Adjusted Return On Capital (RAROC)
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A technique for risk analysis and project evaluation that requires a higher net return for a riskier project than for a less risky project. The risk adjustment is performed by reducing the risky return at the project or instrument return level rather than by adjusting the capital charge. See also Return On Risk Adjusted Capital (RORAC), Risk Adjusted Return On Risk Adjusted Capital (RARORAC).
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