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______________ is type of security listed on Luxembourg.

______________ is type of security listed on Luxembourg.

Looking for the answer to the question below related to Financial Management ? 

______________ is type of security listed on Luxembourg.

 Options:

A. ADR
B. GDR
C. IDR
D. CDR

The Correct Answer Is:

  • B. GDR

The correct answer is B. GDR (Global Depositary Receipt), and I will explain why it is correct in detail, along with the reasons why the other options (ADR, IDR, and CDR) are not correct:

Correct Answer (B. GDR):

GDR, which stands for Global Depositary Receipt, is a type of security listed on various international stock exchanges, including the Luxembourg Stock Exchange. GDRs are financial instruments that represent ownership in a foreign company’s shares. They are designed to make it easier for investors outside of the company’s home country to invest in its stock.

When a foreign company wants to raise capital from international investors or increase its visibility in global markets, it may issue GDRs. These GDRs are traded on stock exchanges such as the Luxembourg Stock Exchange, and they allow investors to indirectly hold shares in the foreign company.

GDRs can be denominated in various currencies, including U.S. dollars and euros, and they provide foreign investors with an opportunity to invest in foreign stocks without having to deal with the local market and currency of the issuing company.

Option A (ADR):

ADRs (American Depositary Receipts) are not securities listed on the Luxembourg Stock Exchange. ADRs are specifically designed for U.S. markets and are issued by U.S. depositary banks, representing shares of foreign companies. They are quoted and traded on U.S. exchanges, not on the Luxembourg Stock Exchange.

ADRs serve the purpose of allowing U.S. investors to invest in foreign companies while using U.S. dollars, but they are not directly related to the Luxembourg Stock Exchange. Therefore, option A is not correct.

Option C (IDR):

IDR typically stands for “Indian Depository Receipt,” which is used in the context of the Indian capital market. IDR allows foreign companies to raise capital in India by issuing depository receipts. These receipts represent ownership in shares of the foreign company. IDR is not related to securities listed on the Luxembourg Stock Exchange. Therefore, option C is not correct.

Option D (CDR):

CDR, which stands for “Chinese Depositary Receipt,” is used in China to allow Chinese investors to invest in foreign companies’ shares listed abroad. While CDRs are related to foreign companies’ shares, they are typically listed on Chinese stock exchanges, such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

They are not associated with the Luxembourg Stock Exchange. Therefore, option D is not correct in the context of securities listed on Luxembourg.

In summary, the correct answer to the question is B. GDR because GDRs are a type of security listed on the Luxembourg Stock Exchange that represents ownership in foreign companies and provides international investors with access to shares of foreign companies without having to deal with the local market and currency of the issuing company.

Options A (ADR), C (IDR), and D (CDR) are not correct as they are not directly related to securities listed on the Luxembourg Stock Exchange and represent different types of depository receipts used in various countries for different purposes.

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