Advantages of using American Depositary Receipts to participate in foreign markets include
I. lower transaction costs than for direct foreign stock purchases.
II. reduced exposure to foreign exchange risk.
III. dividends are paid in U.S. dollars.
IV. quotations are readily available from U.S. sources such as Yahoo Finance or MSN Money.

Question

Quizplus · Accepted Answer

American Depositary Receipts (ADRs) offer several advantages for investors looking to participate in foreign markets, including lower transaction costs compared to direct foreign stock purchases (I), dividends paid in U.S. dollars which simplifies the process for U.S. investors (III), and the ease of finding quotations from U.S. sources like Yahoo Finance or MSN Money (IV). While ADRs might mitigate some aspects of foreign exchange risk due to dividends being paid in U.S. dollars, the underlying shares still carry foreign exchange risk, making II not a direct advantage of ADRs.

Advantages of Using American Depositary Receipts to Participate in Foreign