Products & Their RisksQuestion 5 of 398
An American Depositary Receipt (ADR) is best described as a security that:
a.Represents a bond issued by a foreign government in U.S. dollars
b.Represents shares of a foreign company and trades in U.S. markets in U.S. dollars
c.Gives U.S. investors the right to buy foreign currency at a fixed rate
d.Is a U.S. Treasury instrument denominated in a foreign currency
Explanation
An ADR is issued by a U.S. depositary bank and represents a specified number of a foreign company's shares, trading and paying dividends in U.S. dollars. It is equity-based, not a bond or Treasury, and it is not a foreign-exchange contract.
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