Unit 6 - Discussion.docx

Unit 6 - Discussion.docx - Q11-15 What are American...

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Q11-15. What are American Depositary Receipts (ADRs), and why have they proven so popular with U.S. investors? An ADR is a security that is distributed by a U.S. Bank and it identifies ownership of shares (Singular or Multiple) in a foreign firms stock that is traded on the U.S. Exchange. The reason they tend to be popular with U.S. investors is due to the fact that it permits investors to expand their portfolios more easily in the international market place. Additionally, as they are issued by a U.S. Bank, they are protected under the U.S. laws pertaining to Securities and Exchange, which helps minimize foreign exchange risks. Finally, they are traded in the U.S. Exchange, therefore, the currency tracked is in U.S. dollars. Q12-3. What is the basic conclusion of the original Modigliani and Miller Proposition I?
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