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Postby chandniwadhwani92 » Mon Nov 03, 2014 3:54 pm

1.Depositary recipts
It represent ownership i foreign firms ad are traded in market of other countries
what would b the currency denomination ???/
For ex- If Indian company is listed in japan.here currency denomination would b in rupee or yen??????
In schswer it is given Although the investor does not have to convert to the foreign currency the value of depository receipt is affected by exchange rate changes..
What does these sentence means??

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Postby edupristine » Tue Nov 04, 2014 11:06 am

If an Indian company is listed in Japan, the currency denomination would be Yen i.e the currency of the country in which ADR is listed.

As mentioned above, the ADR is always quoted in the currency in which the ADR is listed.

Now taking the same example of India & Japan, suppose an Indian company is listed in Japan, the value of ADR will fluctuate depending upon the fluctuations in Rupee - Yen exchange rate.

The investor himself does not need to indulge in currency conversions because this is taken care of by ADR authorities.

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