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      Question

      A negotiable certificate issued by a bank representing

      shares in a foreign company traded on a local stock exchange is called?
      A Participatory Notes Correct Answer Incorrect Answer
      B Stock options Correct Answer Incorrect Answer
      C Depository receipts Correct Answer Incorrect Answer
      D Contract Notes Correct Answer Incorrect Answer
      E All of the above Correct Answer Incorrect Answer

      Solution

      A depositary receipt (DR) is a negotiable certificate representing shares in a foreign company traded on a local stock exchange. Depositary receipts allow investors to hold equity shares of foreign companies without the need to trade directly on a foreign market. Depositary receipts allow investors to diversify their portfolios by purchasing shares of companies in different markets and economies. Depositary receipts are more convenient and less expensive than purchasing stocks directly in foreign markets.

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