Listen to a Business English Dialogue about American depositary receipts
William: Hi Isabelle, have you ever invested in American depositary receipts (ADRs)?
Isabelle: Hey William! No, I haven’t. What are they exactly?
William: ADRs are certificates representing shares of foreign companies traded on US stock exchanges, making it easier for American investors to invest in international companies.
Isabelle: Oh, I see. So, it’s like owning a piece of a foreign company without having to deal with foreign stock exchanges?
William: Exactly. It provides investors with access to a diverse range of global companies without the hassle of currency conversion or dealing with different regulatory environments.
Isabelle: That sounds convenient. Are there any risks associated with investing in ADRs?
William: Like any investment, there are risks. ADRs are subject to foreign exchange risk, political instability in the company’s home country, and potential differences in accounting standards.
Isabelle: Right, so investors should do their research before investing in ADRs to understand the specific risks associated with each company.
William: Absolutely. It’s essential to consider factors like the company’s financial health, industry trends, and geopolitical risks before making investment decisions.
Isabelle: Thanks for explaining, William. ADRs seem like an interesting way to diversify one’s investment portfolio with international exposure.
William: You’re welcome, Isabelle. They can indeed be a valuable addition to a well-rounded investment strategy, providing opportunities for growth and diversification.