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CFA Level I · CFA Level I Exam · Equity Instrument Features

An analyst compares a foreign company's global registered shares (GRS) with its American depository receipts (ADRs). Which statement is most accurate?

Global registered shares are the same security trading in multiple markets and currencies and can move between them, so they are fungible. ADRs are depository claims on foreign shares that trade in the US in US dollars. No depository conversion is needed for GRS.

  1. AGRS can trade in different currencies on multiple markets and are fungible across them, whereas ADRs trade in the US in US dollars.Correct
  2. BGRS must be converted into ADRs by a depository bank before they can trade outside the home market.
  3. CGRS are listed only in the home market, whereas ADRs are listed in several markets simultaneously in different currencies.

Explanation

A GRS is the same share that trades in different markets and currencies and can be transferred between them, so it is fungible. An ADR is a separate claim traded in US dollars. The other options reverse or misstate this.

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