Investors may also incur additional fees and taxes to pay on ADRs that they don’t pay with regular stocks. Even though investors buy them in the same fashion as stock, ADRs are often more volatile because their value is subject to the currency exchange rate. With a regular stock, one share is always one share there are no representations of other packaged units. This is different than buying a regular stock. When investors buy one, they buy what the package is, whether that is a fraction of a share, one share, or a bundle of shares of the underlying foreign stock. There is no designation in the stock symbol that defines an ADR. Investors will use a stock symbol to purchase the ADR and may not even realize they are buying a foreign stock. When buying an ADR, the process is often the same as buying a regular stock. Note: Level 1 ADRs are riskier than Level 2 and Level 3 ADRs because they don’t have the strict reporting guidelines required by the SEC.
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