Question : Which financial instrument represents an ownership interest in a foreign company?
Option 1: Equity shares
Option 2: Preference shares
Option 3: ADRs
Option 4: Debentures
Answer (1)
22nd Jan, 2024
Correct Answer: ADRs
Solution : The correct answer is (c) ADRs (American Depositary Receipts).
ADRs represent an ownership interest in a foreign company. ADRs are financial instruments that allow investors in the United States to hold shares of non-U.S. companies. These depositary receipts are issued by U.S. banks, with the underlying shares held by a custodian bank in the foreign company's home country.
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