ADR Definition Wednesday, September 25, 1:03 PM ET
The acronym ADR stands for American Depositary Receipt, and refers to a type of publicly traded security priced in US dollars that is actually a certificate representing a specified number of shares of a foreign stock traded on a foreign exchange in another currency.
By trading ADRs, US investors can gain portfolio exposure to foreign companies, without having to have access to foreign exchanges or having to exchange US currency into a foreign currency. If the foreign company pays a dividend, it will do so in the foreign currency, which is then converted into US dollars and paid out to the ADRs net of any currency conversion expenses and taxes.
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