AMERICAN DEPOSITORY

RECEIPTS
Abstract
Introduced to the financial markets in 1927, an American Depository Receipt (ADR) is a
stock that trades in the United States but represents a specified number of shares in a foreign
corporation. ADRs are bought and sold on American markets just like regular stocks, and are
issued/sponsored in the U.S. by a bank or brokerage. Primarily the difficulties associated with
trading at different prices and currency values. For this reason, U.S. banks simply purchase a
bulk lot of shares from the company, bundle the shares into groups, and reissues them on
either the NYSE, AMEX, or Nasdaq. The depository bank sets the ratio of U.S. ADRs per
home country share. This ratio can be anything less than or greater than 1. The reason they do
this is because they wish to price the ADR high enough as to show substantial value, yet low
enough, so that the individual investors can purchase these shares. Most investors try to avoid
investing in penny stocks, and many would shy away from a company trading for 50 Russian
Roubles per share, which equates to $1.50 US per share. As a result, the majority of ADRs
range between $10 and $100 per share. If, in the home country, the shares were worth
considerably less, then each ADR would represent several real shares. Warrants typically
entitle the holder to purchase a specified number of shares for a specified price over a
specified period of time in the local market. ADWs issued against deposited warrants
generally entitle the holders to purchase a corresponding specified number of American
Depositary Shares (ADSs) representing the issuers shares deposited in its DR facility for a
specified price in $US over the same specified period of time provided under the terms of the
issuers warrants. Certain ADWs have been structured as stock appreciation warrants which
provide investors the opportunity to exercise their ADWs for ADSs upon the occurrence of
certain events or upon triggering a certain strike price specified under the terms of the issuers
appreciation warrants.
V DEEPAK KUMAR
MBA 1ST YEAR
APOORVA COLLEGE OF MANAGEMENT SCIENCES
Email: deepak316jntu@gmail.com
Phone: 9700626271

ABDUL PARVEZ

MBA 2ND YEAR

APOORVA COLLEGE OF MANAGEMENT SCIENCES
Email:shahid708@gmail.com
Phone: 8519906902