The rate of return on adrs is unaffected by changes in the exchange rates. Statement is false.
The term American depositary receipt or ADR refers to a negotiable certificate which is issued by a U.S. depositary bank which represents a specified number of shares.
It is generally one share that is of a foreign company's stock. The ADR generally trades on the U.S. stock markets as any domestic shares can do.
ADRs generally offer U.S. investors a specific way to purchase stock in overseas companies that would not be available otherwise. Foreign firms also benefit from ADRs as it enables them to attract American investors and foreign capital without the hassles and expenses of listing on U.S. stock exchanges.
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