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SIE: Equity Securities
SIE practice questionhardADR Risks

Which risk is unique to ADRs versus domestic stock?

  1. AEligibility for U.S. government guarantees.
  2. BSusceptibility to U.S. interest rate changes.
  3. CExposure to political events in the issuer’s home country.✓ Correct answer
  4. DMore SEC regulation than domestic stocks.
Explanation

Why CExposure to political events in the issuer’s home country.

ADRs represent foreign shares, so can be affected by foreign political risk. U.S. interest rates, government guarantees, and extra regulation do not apply uniquely to ADRs.

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