What are American Depositary Shares (ADS)? Before we take a look at American Depositary Shares, we first need to understand the concept of American Depositary Receipts (ADR). The first ADR was introduced by J.P. Morgan back in 1927 for the British retailer, Selfridges. An ADR is a financial product that trades in the US financial…
What is an Employee Buyout (EBO)? An employee buyout (EBO) is a restructuring strategy used by employers to reduce costs and avoid potential layoffs. It is generally done by offering employees voluntary severance packages. If the package is accepted, the employee must leave the organization. If the employee does not accept the severance package, their…
What is an Employee Stock Option (ESO)? An employee stock option (ESO) is a form of financial equity compensation that is offered to employees and executives by their organization. The stock options offered come in the form of regular call options and allow the employee or executive to purchase their organization’s stocks at a specified…
What is Encroachment? Encroachment is a real estate situation where a property owner violates contractual property rights by unlawfully entering, building, or extending structures onto their neighbor’s land without permission. Whether the encroachment is intentional or not, the property owner is still liable for violating the contractual property rights of their neighbor. Structural encroachment occurs…
What is an Employee Stock Purchase Plan (ESPP)? An employee stock purchase plan (ESPP) refers to a stock program that allows participating employees to purchase their organization’s stock at a discounted price. In some cases, organizations offer stock discounts as high as 15%. Rather than directly purchasing their organization’s stock, participating employees contribute to their…
What is the Economic Calendar? The economic calendar displays the scheduled release dates of information related to the economy that significantly impacts the financial markets. The financial markets are a news-driven supply and demand vehicle; therefore, the release of significant news or economic events will drive price movements in the market. Many investors and traders…
What is Serial Correlation? Serial correlation is a statistical term used to describe the relationship – specifically, the correlation – between the current value of a variable and a lagged value of the same variable from earlier time periods. Serial correlation, also referred to as autocorrelation, is often used by financial analysts to predict future…
What is Shadow Pricing? Shadow pricing is the practice of assigning a monetary value to an item, commodity, or service that is not ordinarily bought and sold in any marketplace. Because no actual price can be assigned by trading in a market, the true value is unknown and can only be estimated. The estimation is…
What is the Shadow Banking System? The shadow banking system is the broad collection of financial institutions and financial markets that offer the same type of services as commercial banks but that are not within the regulatory environment that traditional banks are subject to. Elements of the shadow banking system include mortgage lending companies, repurchase agreements,…
What is a Share Certificate? A share certificate is an investment instrument that is very much like a certificate of deposit (CD). There are two primary differences between share certificates and certificates of deposit. The first is that CDs are offered by banks, while share certificates are only offered through credit unions. The…
