Investment VehiclesQuestion 35 of 110
An American Depositary Receipt (ADR) allows a U.S. investor to do which of the following?
a.Buy U.S. Treasury securities at a discount
b.Hold shares of a foreign company that trade in U.S. markets and dollars
c.Avoid all currency risk on foreign holdings
d.Purchase municipal bonds tax-free
Explanation
An ADR is a negotiable certificate representing shares of a foreign company, allowing U.S. investors to trade in dollars on domestic markets. Despite dollar-denominated trading, ADRs still carry currency risk from the underlying foreign shares. They do not involve Treasuries or municipal bonds.
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