Question : Questions : Debentures and Financial Instruments
Statement 1: Global Depository Receipts (GDRs) enable foreign companies to raise funds in international markets.
Statement 2: GDRs are issued by international financial institutions.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statements 1 and 2 are true.
Option 4: Both statements 1 and 2 are false.
Correct Answer: Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (a) Statement 1 is true, and statement 2 is false.
Statement 1 is true. Global Depository Receipts (GDRs) are a financial instrument used by foreign companies to raise funds in international markets. GDRs are typically issued in foreign markets, denominated in foreign currencies, and represent shares of the issuing company.
Statement 2 is false. GDRs are typically issued by the company itself or in some cases by a designated depository bank, not international financial institutions. GDRs are a way for companies to tap into international markets and attract investment from foreign investors.
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