Which of the Following Is Not True Regarding ADRs

question 56

Multiple Choice

Which of the following is not true regarding ADRs?

• A) ADRs are denominated in the currency of the stock's home country.
• B) ADRs enable U.S. investors to avoid cross-border transactions.
• C) ADRs allow non-U.S. firms to tap into the U.S. market for funds.
• D) ADRs sometimes allow for arbitrage opportunities.

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Definitions:

Break-even Point

The level of production or sales at which total revenues equal total expenses, resulting in neither profit nor loss.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the cushion a business has before it incurs a loss.

Operating Leverage

A measure of how sensitive net operating income is to a given percentage change in dollar sales.

Net Operating Income

The income derived from a firm's core business operations, not including taxes and interest expenses.