B Com Exam > B Com Videos > Interdisciplinary Issues in Indian Commerce > Global Depository Receipt (GDP) - International Finance, Interdisciplinary issues in Indian Commerce
Global Depository Receipt (GDP) - International Finance, Interdisciplinary issues in Indian Commerce Video Lecture | Interdisciplinary Issues in Indian Commerce - B Com
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FAQs on Global Depository Receipt (GDP) - International Finance, Interdisciplinary issues in Indian Commerce Video Lecture - Interdisciplinary Issues in Indian Commerce - B Com
| 1. What is a Global Depository Receipt (GDR)? |  |
Ans. A Global Depository Receipt (GDR) is a financial instrument that represents shares in a foreign company. It is issued by a foreign company outside the country where it operates and is traded on international stock exchanges. GDRs allow foreign companies to raise capital from international investors without directly listing their shares on local stock exchanges.
| 2. How does a Global Depository Receipt (GDR) work? | |
Ans. When a company decides to issue GDRs, it appoints a depository bank to manage the issuance and trading of these receipts. The depository bank holds the shares of the foreign company and issues GDRs against them. These GDRs are then listed on international stock exchanges, allowing investors to buy and sell them. The price of GDRs is usually based on the value of the underlying shares of the foreign company.
| 3. What are the advantages of investing in Global Depository Receipts (GDRs)? | |
Ans. Investing in GDRs offers several advantages. Firstly, it provides an opportunity for investors to diversify their portfolio by gaining exposure to foreign companies. Secondly, GDRs allow investors to invest in companies that may not be listed on their local stock exchanges. Additionally, GDRs provide a convenient way for international companies to raise capital globally without complying with the regulatory requirements of each country.
| 4. Are there any risks associated with investing in Global Depository Receipts (GDRs)? | |
Ans. Yes, there are risks associated with investing in GDRs. One of the main risks is currency risk, as the value of GDRs is often denominated in a foreign currency. Fluctuations in exchange rates can impact the returns on GDR investments. Additionally, investors should consider the political and economic stability of the country where the foreign company operates, as these factors can affect the company's performance and the value of its GDRs.
| 5. Can Indian investors invest in Global Depository Receipts (GDRs)? | |
Ans. Yes, Indian investors can invest in GDRs issued by foreign companies. However, they need to comply with the regulations set by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). Indian investors are allowed to remit up to a certain limit for investment in GDRs, subject to certain conditions. It is advisable for Indian investors to consult with their financial advisors and understand the regulatory requirements before investing in GDRs.
Text Transcript from Video
a global depository receipt also known
as international depository receipt is a
certificate issued by a depository bank
which purchases shares of foreign
companies and deposits it on the account
they are the global equivalent of the
original American depository receipts on
which they are based
GDRs represent ownership of an
underlying number of shares of a foreign
company and are commonly used to invest
in companies from developing or emerging
markets by investors in developed
markets prices of global depository
receipts are based on the values of
related shares but they are traded and
settled independently of the underlying
share typically one GDR is equal to ten
underlying shares but any ratio can be
used it is a negotiable instrument which
is denominated in some freely
convertible currency GDRs enable a
company the issuer to access investors
in capital markets outside of its home
country several international banks
issue GDRs such as JP Morgan Chase
Citigroup Deutsche Bank the Bank of New
York Mellon GDRs are often listed in the
Frankfurt Stock Exchange Luxembourg
Stock Exchange and the London Stock
Exchange where they are traded on the
international order book characteristics
it is an unsecured security it may be
converted into a number of shares
interest and redemption prices public
and foreign agency it is listed and
traded in the stock exchange usage if
for example an Indian company which has
issued a DRS in the American market
wishes to further extend it to other
developed and advanced countries such as
Europe then they can sell these ad ARS
to the public of Europe and the same
would be named as GDR see also
depository receipt American depository
receipt European depository receipt
Luxembourg depository receipt Indian
depository receipt cross listing
references external links Deutsche
Bank's depository receipt website global
depository receipts BNY Mellon ad ARS
Frankfurt Stock Exchange
as international depository receipt is a
certificate issued by a depository bank
which purchases shares of foreign
companies and deposits it on the account
they are the global equivalent of the
original American depository receipts on
which they are based
GDRs represent ownership of an
underlying number of shares of a foreign
company and are commonly used to invest
in companies from developing or emerging
markets by investors in developed
markets prices of global depository
receipts are based on the values of
related shares but they are traded and
settled independently of the underlying
share typically one GDR is equal to ten
underlying shares but any ratio can be
used it is a negotiable instrument which
is denominated in some freely
convertible currency GDRs enable a
company the issuer to access investors
in capital markets outside of its home
country several international banks
issue GDRs such as JP Morgan Chase
Citigroup Deutsche Bank the Bank of New
York Mellon GDRs are often listed in the
Frankfurt Stock Exchange Luxembourg
Stock Exchange and the London Stock
Exchange where they are traded on the
international order book characteristics
it is an unsecured security it may be
converted into a number of shares
interest and redemption prices public
and foreign agency it is listed and
traded in the stock exchange usage if
for example an Indian company which has
issued a DRS in the American market
wishes to further extend it to other
developed and advanced countries such as
Europe then they can sell these ad ARS
to the public of Europe and the same
would be named as GDR see also
depository receipt American depository
receipt European depository receipt
Luxembourg depository receipt Indian
depository receipt cross listing
references external links Deutsche
Bank's depository receipt website global
depository receipts BNY Mellon ad ARS
Frankfurt Stock Exchange
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Dec 23, 2024 Last updated |
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