Which of the following best describes American Depository Receipts (ADRs) ...

By Investopedia Staff AAA
Q:
Which of the following best describes American Depository Receipts (ADRs)?
a) An option to purchase a stated number of shares of a common stock at a stated price
b) Trade foreign securities in U.S. markets
c) Trade U.S. securities in foreign markets
d) Fixed income security portfolio managed by a corporate trustee
A:
The correct answer is b):
ADRs are used to trade foreign securities in the United States. Instead of buying shares of foreign companies in the overseas markets, investors can buy shares in the U.S. in the form of ADRs. This entitles the investor to capital gains/losses and dividends, but it does not eliminate currency risks.

RELATED FAQS

  1. What are the differences between the Series 6 exam and the Series 7 exam?

    Learn about the regulatory exams needed to become a limited or registered representative and the main differences between ...
  2. Do I have to successfully complete the Series 7 exam before I can register for the ...

    There are no prerequisites to register for the Series 63 exam. However, once you have registered for the exam, you must schedule ...
  3. I completed the Series 6, do I have to complete the entire Series 7?

    After having written the Series 6 examination, there would be significant overlap with the Series 7 in areas such as mutual ...
  4. I need special accommodations when taking the Series 63 exam. How are such arrangements ...

    Learn more about special accommodations offered by Series 63 testing sites, and discover how to request special accommodations ...
RELATED TERMS
  1. Series 79

    A examination to ensure a candidate is qualified to become a ...
  2. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  3. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  4. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  5. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  6. Series 28

    An exam given by the Financial Industry Regulatory Authority ...

You May Also Like

Related Articles
  1. Professionals

    Should You Add A Securities License ...

Trading Center