Which of the following statements regarding American Depositary Receipts (ADRs) is true?
A) ADRs are traded only in foreign exchanges.
B) ADRs are denominated in foreign currencies.
C) ADRs represent a stated number of shares in a specific foreign company.
D) The investors in ADRs receive annual interest amounts in dollars.
E) The investors in ADRs receive dividends in foreign currencies.

Question

Quizplus · Accepted Answer

ADRs represent a stated number of shares in a specific foreign company, allowing investors to invest in foreign companies through the U.S. stock market. Option A is incorrect because ADRs can be traded on both U.S. and foreign exchanges. Option B is incorrect because ADRs are denominated in U.S. dollars. Option D is incorrect because ADRs do not provide annual interest payments, but instead provide dividends. Option E is partially incorrect because while dividends are typically paid in U.S. dollars, the underlying dividends from the foreign company may be paid in their local currency.

Which of the Following Statements Regarding American Depositary Receipts (ADRs)