SIE practice questionmediumADR
Which risk is unique to holders of ADRs compared to holders of domestic U.S. stocks?
- ALiquidity risk
- BCurrency risk✓ Correct answer
- CMarket risk
- DInterest rate risk
Explanation
Why B — Currency risk
ADRs are subject to currency risk due to foreign exchange fluctuations. Liquidity and market risks apply to most equities, and interest rate risk is more significant for bonds.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Equity Securities questions
- A company skips its preferred dividend payment for two years and then resumes payments. Which type of preferred…
- A shareholder owns 200 shares of a company's common stock. In an election for three board members, if cumulative voting…
- On the ex-dividend date, what adjustment typically occurs to the stock's price?
- A company with 1 million shares outstanding announces a 3-for-2 stock split. How many shares will be outstanding after…