Research and Insights by Tim Leung, Ph.D.

Professor and Senior Research Advisor

Foreign company stocks listed in US exchanges are commonly registered as American Depositary Receipts (ADRs). These are certificates, denominated in U.S. dollars, that represent shares of non-U.S. company securities. There are about 2000 ADRs traded on U.S. exchanges, namely NYSE and NASDAQ, or through the over-the-counter (OTC) market, representing shares of companies from at least 70 different countries.
The fundamental principle in derivatives pricing is the absence of arbitrage opportunities. Standard no-arbitrage pricing theory asserts that spot and futures prices must converge at expiration. Nevertheless, for years traders have observed significantly higher expiring futures prices for corn, wheat, and soybeans on the Chicago Board of Trade (CBOT) compared to the spot price of the physical grains.
Gold is often viewed as a safe haven asset or a hedge against market turmoils, currency depreciation, and other economic or political events. For instance, during the credit crisis, the Dow and S&P 500 declined by about 20% while gold prices rose from $850 to $1,100 per troy ounce. And then this year, S&P500 has experienced a sharp drop before returning to pre-COVID level lately. Meanwhile, gold ETF (GLD) has gained more than 25% since Feb 2020.
In 2009, Bitcoin (BTC) was introduced to become the first decentralized digital currency. Since then, Bitcoin has been accepted by thousands of merchants and vendors, and the cryptocurrency market has seen enormous growth. Today, there are more than a thousand of cryptocurrencies besides Bitcoin, such as Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), and more that are being traded on major cryptocurrency exchanges internationally.
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