Question
Download Solution PDFWhich one of the following statements is false?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe false statement is "GDR is a negotiable instrument issued by a US bank."
GDR is a negotiable bill, but it is not issued by a US bank. The ADR is issued by the US Basel Bank.
Key Points Global Depository Receipt:
A Global Depository Receipt (GDR), also known as an international depository receipt (IDR), is a certificate issued by a depository bank that purchases foreign company shares and deposits them on an account.
Important Points Features of a GDR:
- It's a freely tradeable instrument that can be exchanged like any other security.
- By the use of a GDR, Indian enterprises with a three-year financial track record can easily gain access to global financial markets. Clearances from the Foreign Investment Promotion Board (FIPB) and the Ministry of Finance are required.
- GDRs are issued by international banks such as JP Morgan, Chase, Citigroup, Deutsche Bank, etc.
- GDRs are issued to investors all throughout the country since they can be denominated in a variety of freely convertible currencies.
- The GDR can be denominated in any foreign currency, but the underlying shares will be in the issuer's native currency.
Last updated on Jun 11, 2025
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