Question : Questions : Different Sources of Finance
Statement 1: Global Depository Receipts (GDRs) allow foreign companies to raise funds in their home country's markets.
Statement 2: GDRs are issued by domestic companies in international 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 false, and statement 2 is true.
Solution : The correct answer is (b) Statement 1 is false, and statement 2 is true.
Statement 1 is false. Global Depository Receipts (GDRs) allow foreign companies to raise funds in international markets, not in their home country's markets. GDRs are issued in a foreign country's stock exchange and denominated in the currency of that country.
Statement 2 is true. GDRs are issued by domestic companies (companies from a particular country) in international markets. These companies issue GDRs to attract investment from international investors. The GDRs are listed and traded on foreign stock exchanges, providing an avenue for foreign investment.
