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    Define ADR advantages they hold over other foreign investments

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    ADRs are a popular investment tool for many U.S. investors. In recent years several alternatives for investing in foreign equity securities have become available for U.S. investors, yet ADRs remain popular. Define what an ADR is and provide at least three examples of the advantages they may hold over alternative foreign investment vehicles for U.S. investors.

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    American Depositary Receipts (ADR's)

    An ADR is a type of security issued by an investment bank or brokerage that trades in the U.S., but represents an interest (shares) in a foreign corporation. This type of investment is traded on a regular stock exchange (NYSE-New York Stock Exchange, NASDAQ, AMEX-American Stock Exchange). Investors are free to buy and sell their ADR shares just as any other common stock.

    A bank/brokerage will go overseas to purchase a certain number of shares in a foreign corporation and then set up a ratio of U.S. to foreign shares as ...

    Solution Summary

    The expert defines ADR with examples and advantages that hold over other foreign investments.