Equity Securities; Warrants And ADRs

Question 1

WARRANTS

Answer 1

OFFERS THE OWNER THE RIGHT TO BUY SHARES IN A COMPANY AT A PRE-DETERMINED PRICE IN THE FUTURE

• THE EXERCISE PRICE OF THE WARRANT IS ABOVE THE CURRENT PRICE OF THE STOCK
• WARRANTS ARE USUALLY GOOD FOR YEARS
• WARRANTS ARE USUALLY ATTACHED TO BOND OFFERINGS OR PREFERRED STOCK MAKING THEM MORE APPEALING “A SWEETENER”
• SORT OF LIKE AN OPTION

Question 2

AMERICAN DEPOSITORY RECEIPTS(ADRs)

Answer 2

RECEIPTS OF FOREIGN SECURITIES TRADED ON AMERICAN EXCHANGES

• ACTUAL SHARES ARE KEPT ON DEPOSIT IN A FOREIGN BRANCH ON AN AMERICAN BANK
• DIVIDENDS ARE PAID BY THE BANK IN US DOLLARS
• SUBJECT TO CURRENCY RISK
• MUST BE REGISTERED WITH SEC
• TRADED ON THE US EXCHANGE OR THE OTC MARKET