Series 7 practice questionmediumEquity Securities — ADRs — Sponsored vs Unsponsored
What is a key difference between sponsored and unsponsored ADRs?
- ASponsored ADRs can only be purchased by institutional investors
- BUnsponsored ADRs are issued with the cooperation of the foreign company, while sponsored are not
- CSponsored ADRs are created with the foreign company's involvement and typically trade on major exchanges, while unsponsored ADRs trade over-the-counter✓ Correct answer
- DThere is no meaningful difference between them
Explanation
Why C — Sponsored ADRs are created with the foreign company's involvement and typically trade on major exchanges, while unsponsored ADRs trade over-the-counter
Sponsored ADRs are created with the direct participation and cooperation of the foreign company, which enters into an agreement with the depositary bank. They typically trade on major US exchanges and provide shareholders with voting rights. Unsponsored ADRs are created without the foreign company's involvement, usually by broker-dealers, and trade over-the-counter with limited shareholder rights.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 758+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Investment Information & Recommendations questions
- Which of the following corporate actions requires shareholder approval?
- A non-affiliate investor acquired restricted stock from an issuer that files reports with the SEC. After holding the…
- An investor holds 200 shares of $100 par, 5% cumulative convertible preferred stock, convertible at $25. The common…
- Which type of preferred stock would exhibit the LEAST price volatility in response to interest rate changes?
- Warrants are most commonly issued:
- A convertible preferred stock has a par value of $100 and is convertible into 4 shares of common stock. If the common…
- Why would a company most likely perform a reverse stock split?
- ABC stock closes at $50 per share and pays a $1 quarterly dividend. The stock goes ex-dividend the next morning. At…