An American depositary receipt is best described as:

An American depositary receipt (ADR) is indeed best described as a domestic security representing a foreign security in U.S. markets. ADRs are issued by U.S. banks and allow U.S. investors to buy shares of foreign companies without dealing with foreign stock exchanges directly. Each ADR represents a specific number of shares in a foreign company, which are held in trust by the bank. This structure facilitates easier buying and selling in the U.S. while providing investors access to international diversification in their portfolios.

The classification of ADRs helps investors gain exposure to foreign companies while benefiting from the regulatory environment and currency denomination of the U.S. markets. This is a key point in understanding how ADRs function as a bridge between foreign securities and U.S. investors.