Japanese Stocks Traded on U.S. Exchanges
* Ratio: You'll probably notice a significant difference in price of the stock, traded as an ADR and on its home exchange. You can easily calculate an over- or undervaluation (and, of course, a fair valuation). All you need is the ratio of ADR to stock, as listed in the table above, and the exchange rate of the US-Dollar to this country's currency. The following, generalized example explains how to calculate.

On June 26, 1998, the Swiss ADR Sulzer Medica, with a ratio of 10:1, was priced USD 24 7/8. In Zurich, its home exchange, Sulzer traded at 379 Swiss Francs. The Dollar/Franc - Exchange rate was 1.526 (1 Dollar buys 1.526 Swiss Francs). Now we can calculate: Multiply the price in Dollar with the ratio (10): 24 7/8 x 10=USD 248.75. With other words, ten ADR's equal one share of Sulzer Medica and will cost you $248.75 (excluding transaction costs). Now you multiply this Dollar-amount with the exchange rate: $248.75 x 1.526=SFR 379.59. The ADR has been valued fair.

The Bank of New York offers free software, which does all the calculation.