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.
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