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American Depositary Receipt (ADR)

Market Mechanics

An ADR is a certificate that represents shares of a non-US company and trades in the US in dollars; a US depositary bank holds the underlying shares and issues ADRs against them.

One ADR need not equal one share: the ratio can be several shares or a fraction of one. Dividends are converted into dollars, withholding tax in the company's home country and depositary fees may apply, and the ADR's dollar price also moves with that country's exchange rate.

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