ADRs are receipts representing shares of foreign stocks held on behalf of an investor by a U.S. financial institution are called:

ADRs are receipts representing shares of foreign stocks held on behalf of an investor by a U.S. financial institution are called:

• A. ADRs
• B. ETFs
• C. Common trust funds
• D. Multinationals

Answer: (A)

ADRs let you own foreign stock through a receipt issued by a U.S. bank that holds the actual shares in trust abroad. This setup lets you trade the foreign company’s stock in U.S. markets, typically in dollars, with dividends also paid in dollars, while the foreign shares stay held by the depositary bank. It’s different from ETFs, which are funds that own a basket of assets and trade like a stock; from common trust funds, which are pooled investments managed by banks; and from the term multinational, which describes a company operating in several countries rather than a receipt representing foreign stock. So the description matches American Depositary Receipts.

ADRs let you own foreign stock through a receipt issued by a U.S. bank that holds the actual shares in trust abroad. This setup lets you trade the foreign company’s stock in U.S. markets, typically in dollars, with dividends also paid in dollars, while the foreign shares stay held by the depositary bank. It’s different from ETFs, which are funds that own a basket of assets and trade like a stock; from common trust funds, which are pooled investments managed by banks; and from the term multinational, which describes a company operating in several countries rather than a receipt representing foreign stock. So the description matches American Depositary Receipts.