SIE (Securities Industry Essentials) Practice Exam

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What security instrument is most associated with enabling a US investor to trade in foreign stock?

ETF
ADR
Mutual fund
REIT

The correct answer is: ADR

ADR, or American Depositary Receipt, is the correct answer because it is a security instrument that allows US investors to trade in foreign stock without having to deal with the complexities of international stock markets. ADRs represent ownership in shares of a foreign company and are traded on US exchanges, making it easier for US investors to access and trade foreign stock. ETFs (A) and mutual funds (C) are not specifically associated with enabling US investors to trade in foreign stock. While these investment vehicles may offer exposure to foreign markets, they are not specifically designed for trading in foreign stock. REITs (D), or Real Estate Investment Trusts, are also not associated with enabling US investors to trade in foreign stock. REITs are investment vehicles that own and operate income-generating real estate properties.