Question

The reason that some European firms do not sell equity securities in the U.S. or even...

The reason that some European firms do not sell equity securities in the U.S. or even withdraw their listing from U.S. stock exchanges is because of

a. the threat of confiscation.

b. detailed U.S. disclosure rules.

c. the relative inefficiency of U.S. equity markets.

d. the foreign exchange risk of listing in U.S. dollars.

Homework Answers

Answer #1

There is always a risk associated with Investment in foreign markets and it may be termed as foreign exchange risk as when you Liquidate your holding in foreign markets, the margin of profits and loss gets highly impacted by foreign exchange rates between domestic and foreign currency.

So, The reason that some European firms do not sell equity securities in the U.S. or even withdraw their listing from U.S. stock exchanges is because of (D) The foreign exchange risk of being listed in American dollars.

There is no threat of confiscation on selling of security in us markets and there is not that much of disclosure that stops an investor selling his equity holding. US markets is also an efficient market.

So All the option except (D) is False.

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