Q.(a) Distinguish between GDR and ADR.

A depository receipt is a negotiable instrument that represents ownership in the shares/securities of a foreign issuer, letting investors in one country hold a foreign company's securities; so the answer is a depository receipt.

When a company wants to raise capital abroad, its shares are deposited with a depository, which issues depository receipts against them. Each receipt represents ownership interest in the underlying securities of the foreign issuer and can be traded in the foreign market. Common forms are:

• GDR (Global Depository Receipt) — traded in more than one foreign market. …

The special bond issued by companies to raise money in foreign currency is the Foreign Currency Convertible Bond, option (d).

When a company wants to raise funds from foreign markets, one instrument it can use is the Foreign Currency Convertible Bond (FCCB). It is a type of bond issued in a foreign currency; it carries a fixed rate of interest and gives the holder the option to convert it into equity shares of the issuing company after a certain period. Thus it combines the features of a debt instrument and a possible equity stake, while allowing the company to raise money abroad.

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An instrument representing ownership interest in the securities of a foreign issuer is a depository receipt, so the correct option is (a).

In the international finance chapter of the Tamil Nadu HSC Commerce syllabus, depository receipts are studied as a source of raising foreign capital.

• A depository receipt (such as a Global Depository Receipt, GDR, or American Depository Receipt, ADR) is a negotiable financial instrument issued by a depository bank that represents ownership interest in the shares/securities of a foreign company. It lets investors in one country hold shares of a company located in another country. …