Important Terms in Capital Market

Important Terms in Capital Market

Accounting beta: A related measure of the sensitivity of a firm’s accounting earnings to the changes in the earnings of market portfolio.

Adjusted beta: An estimate of a security’s future beta, derived initially from historical data, but modified by the assumption that the security’s true beta has a tendency over time to move toward the market average of 1.0.

ADRs: American Depository Receipts (ADRs) are negotiable receipts issued to investors by an authorised depository, normally a US bank or depository, in lieu of shares of the foreign company which are actually held by the depository. ADRs can be listed and traded in a US-based stock exchange and help the Indian company to be known in the highly liquid US stock exchanges. ADRs also help the US-based and other foreign investors to have the twin benefits of having shareholding in a high growth Indian company and the convenience of trading in a highly liquid and well-known stock market. Two Indian companies Infosys and ICICI have gone in for ADRs.

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