Risk Adjusted Return on Capital (RAROC) for Financial Institutions
Jeff For Banks
MAY 8, 2012
'How do you measure the profitability of lines of business, products, or customers? The simplest form is in dollars. But does that measure the profits against the investment required to generate those profits? For example, the riskiest banking products most likely deliver the greatest dollar profits, all other things being equal. At least until the risk comes to roost.
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