Q. Depository receipts are Financial Instruments through which companies raise capital from Investors. In this context, consider the following statements:
Which of the above statements are correct?
Q. Depository receipts are Financial Instruments through which companies raise capital from Investors. In this context, consider the following statements:
Which of the above statements are correct?
The correct option is D 1, 2 and 3 only
Explanation:
Statement 1 is correct: A depository receipt (DR) is a negotiable certificate representing shares in a foreign company traded on a local stock exchange. It is a negotiable instrument that can be traded like any other security instrument freely.
Statement 2 is correct: Indian companies that have a solid financial record of about three years are readily allowed access to global financial markets through the use of a GDR. However, clearances are required from the Foreign Investment Promotion Board (FIPB) and the Ministry of Finance.
Statement 3 is correct: Depository receipts allow investors to diversify their portfolios by purchasing shares of companies in different markets and economies. Depository receipts are more convenient and less expensive than purchasing stocks directly in foreign markets.
Explanation:
Statement 1 is correct: A depository receipt (DR) is a negotiable certificate representing shares in a foreign company traded on a local stock exchange. It is a negotiable instrument that can be traded like any other security instrument freely.
Statement 2 is correct: Indian companies that have a solid financial record of about three years are readily allowed access to global financial markets through the use of a GDR. However, clearances are required from the Foreign Investment Promotion Board (FIPB) and the Ministry of Finance.
Statement 3 is correct: Depository receipts allow investors to diversify their portfolios by purchasing shares of companies in different markets and economies. Depository receipts are more convenient and less expensive than purchasing stocks directly in foreign markets.
