Which one of the following is NOT an advantage that American Depository Receipts (ADRs) have over investing in actual shares of a foreign stock?
A) ADRs are an effective barrier to foreign currency risk.
B) Unlike direct foreign stock, ADRs have financial statements presented in a GAAP format.
C) Dividends are paid in dollars and are easier to collect than actual shares of foreign stock.
D) ADRs are more liquid and less expensive than buying foreign stock directly.

Question

Quizplus · Accepted Answer

ADRs do not act as a barrier to foreign currency risk. They simplify investing in foreign stocks by trading in U.S. markets and dealing in U.S. dollars, but the underlying value is still affected by currency fluctuations.

Which One of the Following Is NOT an Advantage That