Kayla purchased 500 ADRs in Pearson PLC, a British Company. How will fluctuations in the dollar/pound exchange rate affect the value of her investment?
◦ Because the ADRs are denominated in dollars, the exchange rate will have no effect on her investment.
◦ Changes in the exchange rate will be directly reflected in both the ADR value and dividends.
◦ If the pound weakens against the dollar, the dollar value of her ADRs will increase.
◦ If the dollar weakens against the pound, the value of her ADRs will decrease.