Question : Assertion-Reason Questions: Chapter - Sources of Business Finance
Questions : Different Sources of Finance
Assertion: Global Depository Receipts (GDRs) enable foreign companies to raise funds in international markets.
Reason: GDRs are issued by foreign companies in their home country's markets.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Both assertion and reason are false.
Correct Answer:
Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Solution : The correct answer is (a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.
The assertion is true. GDRs are a way for foreign companies to raise capital from international investors by listing their shares on foreign exchanges. GDRs are traded internationally and denominated in a foreign currency.
The reason is the correct explanation of the assertion. GDRs are issued by foreign companies, typically in their home country, and these receipts represent shares of the foreign company. However, they are traded and listed on international stock exchanges, allowing foreign companies to access a broader base of international investors and raise funds from global markets.
