Question : Case Study: ABC Corporation - Financing Growth Strategies
ABC Corporation, a leading manufacturing company, is looking to finance its growth strategies. The company is exploring various sources of business finance to achieve its expansion goals.
Questions : Debentures and Financial Instruments
How are GDRs and ADRs similar in terms of their purpose?
Option 1: Both represent debt securities
Option 2: Both are issued in domestic markets
Option 3: Both allow companies to raise funds in their home country
Option 4: Both enable companies to raise capital in international markets
Correct Answer: Both enable companies to raise capital in international markets
Solution : The correct answer is (d) Both enable companies to raise capital in international markets
GDRs and ADRs allow companies to access international capital markets by issuing their shares in the form of depository receipts. GDRs are traded outside the United States, and ADRs are traded in the United States. Both serve as instruments to raise capital by attracting investment from international investors and expanding the company's investor base beyond its home country.
