Question : Case Study: LMN Ventures - Financing Innovation and Research
LMN Ventures is a research-driven technology company aiming to innovate and develop cutting-edge products. The company is exploring various sources of business finance to support its research and development endeavors.
Question: Debentures and Financial Instruments
How do GDRs and ADRs enable companies like LMN Ventures to raise funds?
Option 1: They provide tax benefits to companies
Option 2: They offer fixed interest rates to investors
Option 3: They allow companies to borrow from international banks
Option 4: They facilitate fundraising in global markets
Correct Answer: They facilitate fundraising in global markets
Solution : The correct answer is (d) They facilitate fundraising in global markets
GDRs and ADRs are financial instruments that represent shares of the company and are traded on international stock exchanges. They allow companies to tap into global capital markets, attracting international investors to invest in the company's shares without being listed on the local exchange. This expands the potential investor base and helps in raising funds on a larger scale.