what is ADR? what is its work? Related: Work procedure and power - Industrial Dispute Act(1947), Industrial Laws?

Question

what is ADR? what is its work? Related:  Work procedure and power - Industrial Dispute Act(1947), Industrial Laws?

Answer

An American depositary receipt (ADR) is a negotiable certificate issued by a U.S. depository bank representing a specified number of shares—or as little as one share—investment in a foreign company's stock. ADRs represent a feasible, liquid way for U.S. investors to purchase stock in companies abroad
A typical ADR goes through the following steps before it is issued:

The issuing bank in the US studies the financials of the foreign company in detail to assess the strength of its stock.

The bank buys shares of the foreign company.

The shares are grouped into packets.

Each packet is issued as an ADR through an American stock exchange.

The ADR is priced in dollars, and the dividends are paid out in dollars as well, making it as simple for an American investor to buy as the stock of a US based company. Today, there are thousands of ADRs in the American markets offered by leading banks like Deutsche Bank and JP Morgan.

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