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Chapter 5: Q15DQ (page 680)

What are ADRs?

Short Answer

Expert verified

ADRs stand for American depositary receipts. ADRs are one of the most convenient and popular ways for investors to buy stocks of companies based outside the U.S.

Step by step solution

01

Definition

American depositary receipts (ADRs) are a negotiable certificate issued by a U.S. depositary bank representing a specified number of shares.

02

Trading of ADRs

ADRs are traded on the U.S. stock market when a company wants to collect dollar currency. It offers U.S. investors a way to purchase stock in overseas companies that would not be available otherwise. ADRs and their dividends are priced in U.S. dollars. All of this makes it easier for Americans to invest in foreign companies.

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