Question

_____ is/are the disadvantage(s) of Global Depository Receipts.

• A. Dividends are paid in domestic countrys currency which is subject to volatility in the forex market.
• B. It is mostly beneficial to High Net-Worth Individual (HNI) investors.
• C. GDR is one of the expensive sources of finance.
• D. All of the above

Answer 1

The correct option is D All of the above

GDR is a foreign currency denominated derivative instrument in the form of depository receipt created outside India and issued to non-resident investors. GDR stands for Global Depository Receipt. It is a bank certificate issued in more than one country for shares in a foreign company. Disadvantages of GDR are:

a) Dividends are paid in domestic countrys currency which is subject to volatility in the forex market.

b) It is mostly beneficial to High Net-Worth Individual (HNI) investors.

c) GDR is one of the expensive sources of finance.