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SIE: Equity Securities
SIE practice questionmediumADR Risks

A unique risk of owning an ADR compared to domestic stock is:

  1. ANo access to stock price information.
  2. BReceiving dividends in a foreign language.
  3. CHigher bankruptcy risk of U.S. exchanges.
  4. DExposure to currency fluctuations.✓ Correct answer
Explanation

Why DExposure 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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