Series 7 practice questioneasyEquity Securities — ADRs
American Depositary Receipts (ADRs) represent:
- AShares of domestic companies traded on foreign exchanges
- BForeign government bonds held by US banks
- CShares of foreign companies held in trust by a US depositary bank and traded on US exchanges✓ Correct answer
- DUS Treasury securities held by foreign central banks
Explanation
Why C — Shares of foreign companies held in trust by a US depositary bank and traded on US exchanges
ADRs are negotiable certificates issued by a US depositary bank representing a specified number of shares of a foreign company. They are denominated in US dollars and trade on US exchanges, making it easier for US investors to invest in foreign companies without dealing with foreign currencies or settlement systems.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 755+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Investment Information & Recommendations questions
- An investor holding ADRs of a Japanese company is most exposed to which additional risk compared to holding domestic…
- Which of the following statements BEST distinguishes warrants from rights?
- Under SEC Rule 144, restricted securities acquired from an issuer in a private placement must be held for a minimum of…
- A company announces a rights offering to existing shareholders. The subscription price is set at $40, and the stock is…