All of the Following Are True Regarding American Depository Receipts

question 19

Multiple Choice

All of the following are true regarding American Depository Receipts (ADRs) EXCEPT:

• A) Most ADRs are unsponsored, meaning that the DR bank creates a DR program without a formal agreement with the issuing non-US company.
• B) An ADR is a derivative instrument traded in the US that usually represents a fixed number of publicly traded shares of a non-US company.
• C) ADRs are denominated in US dollars.
• D) A Level 1 sponsored ADR is the easiest way for a non-US company to access US markets.

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Definitions:

Subsidiary

A company that is completely or partially owned and controlled by another company, known as the parent company.

Parent Company

A company that owns more than 50% of the common stock of another entity.

Stockholders' Equity

Represents the owners' residual interest in the corporation's assets after deducting liabilities.

Total Revenues

The sum of money made from sales of goods or services that are central to the business's core activities.