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) do indeed enable foreign companies to raise funds in international markets by issuing depository receipts that represent ownership of their shares. GDRs are typically listed and traded on international stock exchanges.
Statement 2 is false. GDRs are not issued by international financial institutions. GDRs are issued by depositary banks, not financial institutions, and represent a specific number of shares in a foreign company. These shares are held in the depositary bank's home country and traded on international markets.
