Question : Questions : Different Sources of Finance
Statement 1: Global Depository Receipts (GDRs) enable foreign companies to raise funds in international markets.
Statement 2: GDRs are issued by foreign companies in their home country's markets.
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) 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 foreign companies in their home country's markets. Instead, they are issued and listed on foreign stock exchanges, denominated in a foreign currency, and enable these companies to access international investors and raise capital in those markets.
