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Which one of the following is NOT an advantage that American Depository Receipts (ADRs) have over...

Which one of the following is NOT an advantage that American Depository Receipts (ADRs) have over investing in actual shares of a foreign stock?

ADRs are an effective barrier to foreign currency risk.

Unlike direct foreign stock, ADRs have financial statements presented in a GAAP format.

Dividends are paid in dollars and are easier to collect than actual shares of foreign stock.

ADRs are more liquid and less expensive than buying foreign stock directly.

Solutions

Expert Solution

ADRs are an effective barrier to foreign currency risk.

Explanation:

American Depository Receipt doesn't provide any barrier to foreign currency risk, it has currency risk in it, if the foreign currency depreciated against dollar then realized gain will be lower.

jeff jeffy answered 2 years ago
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