ADRs are bought and sold in the U.S. securities market like which of the following?

• A. Like any stock
• B. Only on foreign exchanges
• C. As fixed-income securities
• D. Not subject to U.S. taxes

Answer: (A)

ADRs let U.S. investors own foreign company shares through a U.S.-traded instrument. They are negotiable receipts issued by a U.S. bank that represent a specific number of foreign shares, and they are bought and sold in the U.S. securities market just like regular stocks. They’re priced in dollars, can be listed on U.S. exchanges or traded over the counter, and settle through the same U.S. clearing systems. So the best description is that ADRs are bought and sold like any stock. They’re not limited to foreign exchanges, they’re not fixed-income securities, and they’re not exempt from U.S. taxes.