Risk-Adjusted Return On Capital (RAROC)

Risk-Adjusted Return On Capital (RAROC) is an adjustment to the return on an investment that accounts for the element of risk. 

Risk-Adjusted Return On Capital (RAROC)

Risk-Adjusted Return On Capital (RAROC) is an adjustment to the return on an investment that accounts for the element of risk. 

 


Explanation of Risk-Adjusted Return On Capital

Risk-Adjusted Return On Capital gives decision makers the ability to compare the returns on several different projects with varying risk levels. RAROC was popularized by Bankers Trust in the 1980s as an adjustment to simple return on capital (ROC).


Related Terms