SIE practice questioneasyAmerican Depositary Receipts (ADRs)
What is an American Depositary Receipt (ADR)?
- AA type of mutual fund that invests exclusively in American companies
- BA document showing proof of U.S. citizenship for investment purposes
- CA receipt for U.S. government bonds held in a foreign bank
- DA negotiable certificate representing shares of a foreign company, traded on U.S. exchanges✓ Correct answer
Explanation
Why D — A negotiable certificate representing shares of a foreign company, traded on U.S. exchanges
An ADR is a negotiable certificate issued by a U.S. depositary bank that represents a specified number of shares in a foreign company. ADRs trade on U.S. exchanges in U.S. dollars, making it easier for American investors to invest in foreign companies without dealing with foreign exchanges or currencies directly.
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