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American Depository Receipts (ADRs)

An American Depository Receipts (ADR) is a certificate issued by a bank or broker in the US that represents a specified number of shares of a particular foreign company. ADRs can be listed on stock exchanges or in over-the-counter markets (OTCs). ADRs are traded just like shares; they are shares of a foreign company listed on a foreign exchange. Like the usual stocks their price also moves on supply and demand mechanics.

Usually only residents of a country can invest in shares trading on its exchanges. Through ADRs Americans can invest in shares of foreign companies listed in NYSE, AMEX, Nasdaq and OTCs in the USA. For instance an NRI can invest in stocks of Tata Motors through ADRs issued by the company in USA.

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