Which One of the Following Is NOT an Advantage That

question 68

Multiple Choice

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

• A) ADRs are an effective barrier to foreign currency risk.
• B) Unlike direct foreign stock, ADRs have financial statements presented in a GAAP format.
• C) Dividends are paid in dollars and are easier to collect than actual shares of foreign stock.
• D) ADRs are more liquid and less expensive than buying foreign stock directly.

---

Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold before accounting for other expenses.

Markup

The amount added to the cost of goods to cover overhead and profit, usually expressed as a percentage of the cost.

Discontinued Inventory

Discontinued inventory includes products that are no longer being produced or sold by a company, often due to obsolescence or strategy shifts.

Gross Profit Margin

A profitability metric that shows the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency in producing goods.