DEFF ADR represents 20% of the value of a DEFF ordinary share. The ordinary shares trade on the London Stock Exchange, where the current price is 200 British Pounds (BP). The current exchange rate for the British Pound against the U. S. Dollar is $1.40. The ordinary share pays an annualized dividend of 12 BP, with payment made semi-annually. The DEFF ADR is listed on the NYSE. If a customer places an order to buy $560,000 of the ADR on the NYSE, how much will the customer receive in each dividend payment

$16,800

Explanation:

Calculation to determine how much will the customer receive in each dividend payment

First step is to calculate the ADR

ADR=$560,000 / $56

ADR= 10,000 ADR shares.

Note that U.S. market ADR will be either be 1/5th or $56 per U.S. ADR

Second step is to calculate the Semiannual annual dividend rate per ordinary share

Semiannual annual dividend rate per ordinary share =[(12 BP/2)*1/5th ADR worth ]*$1.40 exchange rate

Semiannual annual dividend rate per ordinary share =(6BP* *1/5th ADR worth)*$1.40 exchange rate

Semiannual annual dividend rate per ordinary share =$1.2per ADR share*$1.40 exchange rate

Semiannual annual dividend rate per ordinary share =$1.68

Now let calculate how much will the customer receive in each dividend payment

Dividend payment = $1.68 per ADR share x 10,000 shares

Dividend payment = $16,800

Therefore how much will the customer receive in each dividend payment is $16,800

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empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

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