Reading 35: Equity: Markets and Instruments- LOS e～ Q1-11 several, company, supplied, increase, investment

wzaina

 

LOS e: Describe an American Depository Receipt (ADR), and differentiate among the various forms of ADRs in terms of trading and information supplied by the listed company.

Q1. Harvey Wellington manages the London office for Samson Securities, a large investment bank based in New York. Wellington is working with several clients in Great Britain and Continental Europe who want to increase the appeal of their shares to U.S. investors.

Two clients in particular, a German staffing firm called Werk Corp. and a British maker of medical-supplies called Sussex Sutures, are in a hurry to reach the U.S. market. Wellington considers some characteristics of both companies before making his recommendation.

Werk Corp.

• Seeks higher visibility in the U.S.
• Worried about U.S. perception of the euro.
• Has little cash to spend.
• Not prepared to meet U.S. accounting standards.

Sussex Sutures

• Wants to increase sales to U.S. customers.
• Needs ADR to raise capital for expansion.
• Prepared to meet U.S. accounting standards.
• Seeks to limit issuing costs.

While Wellington is considering how best to help Werk Corp., one of Samson’s institutional clients, Cleveland’s Carter-Worth Cogs, purchases 5,000 shares of Werk Corp. on the German exchange for 26.85 euros (

wzaina

 

 

LOS e: Describe an American Depository Receipt (ADR), and differentiate among the various forms of ADRs in terms of trading and information supplied by the listed company. fficeffice" />

Q1. Harvey Wellington manages the ffice:smarttags" />London office for Samson Securities, a large investment bank based in New York. Wellington is working with several clients in Great Britain and Continental Europe who want to increase the appeal of their shares to U.S. investors.

Two clients in particular, a German staffing firm called Werk Corp. and a British maker of medical-supplies called Sussex Sutures, are in a hurry to reach the U.S. market. Wellington considers some characteristics of both companies before making his recommendation.

Werk Corp.

• Seeks higher visibility in the U.S.
• Worried about U.S. perception of the euro.
• Has little cash to spend.
• Not prepared to meet U.S. accounting standards.

Sussex Sutures

• Wants to increase sales to U.S. customers.
• Needs ADR to raise capital for expansion.
• Prepared to meet U.S. accounting standards.
• Seeks to limit issuing costs.

While Wellington is considering how best to help Werk Corp., one of Samson’s institutional clients, Cleveland’s Carter-Worth Cogs, purchases 5,000 shares of Werk Corp. on the German exchange for 26.85 euros (

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