EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103164535
Author: DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem 14P
An American Depositary Receipt (ADR) is security issued by a U.S. bank and traded on a U.S. stock exchange that represents a specific number of shares of a foreign stock. For example, Nokia Corporation trades as an ADR with symbol NOK on the NYSE. Each ADR represents one share of Nokia Corporation stock, which trades with symbol NOK1V on the Helsinki stock exchange. If the U.S. ADR for Nokia is trading for $6.74 per share, and Nokia stock is trading on the Helsinki exchange for 6.20 € per share, use the Law of One Price to determine the current $/€ exchange rate.
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An American Depositary Receipt (ADR) is defined as a security:(a) that has been deposited in an interest-bearing account at a U.S. bank(b) issued outside the U.S. that represents shares of a U.S. stock(c) issued in the U.S. that represents shares of a foreign stock(d) that has a guarantee of payment from a U.S. bank(e) issued in multiple countries but denominated in U.S. currency
An American Depositary Receipt (ADR) is security issued by a U.S. bank and traded on a U.S. stock exchange that represents a specific number of shares of a foreign stock. For example, Nokia Corporation trades as
an ADR under the symbol NOK on the NYSE. Each ADR represents one share of Nokia Corporation stock, which trades under the symbol NOK1V on the Helsinki stock exchange. If the U.S. ADR for Nokia is trading
for $7.56 per share, and Nokia stock is trading on the Helsinki exchange for €6.08 per share, use the Law of One Price to determine the current $/€ exchange rate.
The current $/€ exchange rate is
per €. (Round to three decimal places.)
. An American Depositary Receipt is defined as a security:
A.
that has been deposited in an interest-bearing account at a U.S. bank.
B.
issued outside the U.S. that represents shares of a U.S. stock.
C.
issued in the U.S. that represents shares of a foreign stock.
D.
that has a guarantee of payment from a U.S. bank.
E.
issued in multiple countries but denominated in U.S. currency.
Chapter 3 Solutions
EBK CORPORATE FINANCE
Ch. 3.1 - Prob. 1CCCh. 3.1 - If crude oil trades in a competitive market, would...Ch. 3.2 - How do you compare costs at different points in...Ch. 3.2 - Prob. 2CCCh. 3.3 - What is the NPV decision rule?Ch. 3.3 - Why doesnt the NPV decision rule depend on the...Ch. 3.4 - Prob. 1CCCh. 3.4 - Prob. 2CCCh. 3.5 - If a firm makes an investment that has a positive...Ch. 3.5 - Prob. 2CC
Ch. 3.5 - Prob. 3CCCh. 3.A - The table here shows the no-arbitrage prices of...Ch. 3.A - Suppose security Chas a payoff of 600 when the...Ch. 3.A - Prob. A.3PCh. 3.A - Prob. A.4PCh. 3.A - Prob. A.5PCh. 3.A - Consider a portfolio of two securities: one share...Ch. 3.A2 - Why does the expected return of a risky security...Ch. 3.A2 - Prob. 2CCCh. 3.A3 - Prob. 1CCCh. 3.A3 - Prob. 2CCCh. 3 - Honda Motor Company is considering offering a 2000...Ch. 3 - You are an international shrimp trader. A food...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - You have decided to take your daughter skiing in...Ch. 3 - Suppose the risk-free interest rate is 4%. a....Ch. 3 - You have an investment opportunity in Japan. It...Ch. 3 - Your firm has a risk-free investment opportunity...Ch. 3 - You run a construction firm. You have just won a...Ch. 3 - Your firm has identified three potential...Ch. 3 - Your computer manufacturing firm must purchase...Ch. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - An American Depositary Receipt (ADR) is security...Ch. 3 - Prob. 15PCh. 3 - An Exchange-Traded Fund (ETF) is a security that...Ch. 3 - Consider two securities that pay risk-free cash...Ch. 3 - Prob. 18P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Which of the following is a negotiable written promise (by a bank) for a U.S. dollar deposit at a bank located outside the United States or in U.S. International Banking Facilities.? a.Certificate of Deposits b.Bankers acceptances c.Eurodollar CD d.Repurchase agreementarrow_forwardWhy are foreign banks or insurance corporations cannot deposit securities with the SEC?arrow_forwardForeign currencies that are deposited in banks outside the home country are known as foreign bonds. Eurobond. Eurocurrencies. Eurodollars.arrow_forward
- Unsponsored ADRs are created by a bank at the request of the foreign company that issues the underlying security. True or False?arrow_forwardIdentify each transaction by whether it belongs in the US current account or financial account: The central bank of China collects interest payments on US government securities that it had previously bought. O Financial Account O Current Accountarrow_forward__________________________________ is a negotiable CD for a U.S. dollar deposit at a bank located outside the United States or in U.S. International Banking Facilities. Select one: A. Repurchase Agreements B. Eurodollar CD C. Foreign Deposits D. Treasury Billarrow_forward
- Explain how a U.S. corporation could hedge net receivables in Malaysian ringgit with a forward contract. Explain how a U.S. corporation could hedge payables in Canadian dollars with a forward contract.arrow_forwardIn the foreign exchange market, a ‘contract date’ is the expiry date of a forward contract. the date on which a futures contract is traded. the date on which two banks start a currency swap. the date on which a foreign exchange transaction is concluded.arrow_forwardoreign currencies that are deposited in banks outside the home country are known as foreign bonds. Eurobond. Eurocurrencies. Eurodollars.arrow_forward
- Securities that are registered at the U.S. Federal level are not subject to U.S. state governments requiring their own registration because of _____________________. A. The Financial Institution Modernization ActB. SEC Rule 144AC. The Federal Reserve ActD. SEC Rule 415E. The National Securities Market Improvement Actarrow_forwardWhich of the following statements about the foreign exchange market is NOT true? The client market, also referred to as the retail market, is a segment of the FX market. FX brokers match buy and sell orders and carry a large inventory of foreign exchange. Nonbank dealers represent approximately 40% of the market. About 100-200 banks worldwide are prepared to make a market in foreign exchange.arrow_forwardA foreign-based company must use US GAAP if it wants to have its stock traded on a US stock exchange. Group of answer choices True Falsearrow_forward
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