SIE practice questionmediumADR Risks
A unique risk of owning an ADR compared to domestic stock is:
- ANo access to stock price information.
- BReceiving dividends in a foreign language.
- CHigher bankruptcy risk of U.S. exchanges.
- DExposure to currency fluctuations.✓ Correct answer
Explanation
Why D — Exposure to currency fluctuations.
ADRs are subject to foreign exchange risk. Dividends are in English, bankruptcy risk isn’t higher, and price information is public.
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