What is an Erroneous Trade? An erroneous trade is a stock transaction that deviates so much from the current market price that it is considered an error. Erroneous trades are caused by a variety of factors including computer malfunctions or human error. These trades are often reversed, or broken, because they do not reflect the
What Is an Error of Principle? An error of principle is an accounting mistake in which an entry violates a fundamental principle of accounting or a fundamental accounting principle established by a company. Key Takeaways Errors of principle typically include correct amounts but violations of company accounting principles.Common errors of principle can include: mixing up debits and credits
What Is Error Resolution? Error resolution is a procedure that allows consumers to dispute bookkeeping errors or unauthorized transactions related to their bank accounts. The error resolution process is codified under Regulation E, the Federal Reserve’s implementation of the Electronic Fund Transfer Act (EFTA) of 1978. Key Takeaways Error resolution is the formal process followed
What Is Errors and Omissions (E&O) Insurance? Errors and omissions (E&O) insurance is a type of professional liability insurance that protects companies, their workers, and other professionals against claims of inadequate work or negligent actions. Key Takeaways Errors and omissions insurance is a form of professional liability insurance.E&O insurance protects companies and professionals against claims
What Is an Escalator Clause? An escalator clause is a contract provision that allows for an automatic increase in the agreed-upon wages or prices if certain conditions change while the contract is in effect. An adjustment to a labor contract may be triggered by an increase in the inflation rate. An adjustment to a business-to-business
What Is Escheat? Escheat is the right of a government to take ownership of estate assets or unclaimed property in the event there are no heirs or beneficiaries. Escheat rights can also be granted when assets are unclaimed for a prolonged period. These situations can also be referred to as bona vacantia or simply unclaimed property.
What Is Escrow? Escrow is a legal concept describing a financial agreement whereby an asset or money is held by a third party on behalf of two other parties that are in the process of completing a transaction. Escrow accounts are managed by the escrow agent. The agent releases the assets or funds only upon
What Is an Escrow Agent? An escrow agent is a person or entity that holds property in trust for third parties while a transaction is finalized or a disagreement is resolved. The role of escrow agent is often played by an attorney (or notary in civil law jurisdictions). The escrow agent has a fiduciary responsibility
What Is an Escrow Agreement? An escrow agreement is a contract that outlines the terms and conditions between parties involved, and the responsibility of each. Escrow agreements generally involve an independent third party, called an escrow agent, who holds an asset of value until the specified conditions of the contract are met. However, they should
What Is the Equity Premium Puzzle (EPP)? The equity premium puzzle (EPP) refers to the excessively high historical outperformance of stocks over Treasury bills, which is difficult to explain. The equity risk premium, which is usually defined as equity returns minus the return of Treasury bills, is estimated to be between 5% and 8% in
