Question

A share of the ADR of a Dutch firm represents one share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 15 euros when the Dutch market closed. As the U.S. market opens, the euro is worth 1.10. Thus, the price of the ADR should be ____?

1) 13.64
2) 15.00
3) 16.50
4) 16.50 euros
5) None of these are correct.

Answer 1

The ADR price of the Dutch firm on the US stock exchange, calculated with a 15 euro share price and a 1.10 exchange rate, is 3) 16.50 dollars.

Step-by-step explanation:

The question asks to calculate the price of an American Depositary Receipt (ADR) for a Dutch firm traded on a US market, based on the share price in euros and the current exchange rate. Given that the share price of the Dutch firm was 15 euros and the exchange rate is 1.10 dollars per euro, the price of the ADR in dollars would be calculated by multiplying the share price in euros by the exchange rate.

To find the ADR price: 15 euros × 1.10 dollars/euro = 16.50 dollars.

Therefore, the correct price of the ADR should be 16.50 dollars, making option 3 the correct answer.