GDR

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GDR

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

International Depository Receipt

A certificate issued by a bank representing shares of a stock the bank holds in trust but that are traded on a foreign stock exchange. The IDR is denominated in the local currency, and entitles the bearer to any dividends and other benefits associated with the shares. IDRs can be traded like any other security. Using IDRs shields the investor from foreign exchange risk and any applicable tariffs he/she would have had to pay if he/she had bought the stock outright. It also exempts the investor from any requirements the foreign exchange might have levied. It is also known as a global depository receipt (GDR). See also: American Depository Receipt.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

GDR

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Global depositary receipt (GDR).

To raise money in more than one market, some corporations use global depositary receipts (GDRs) to sell their stock on markets in countries other than the one where they have their headquarters.

The GDRs are issued in the currency of the country where the stock is trading. For example, a Mexican company might offer GDRs priced in pounds in London and in yen in Tokyo.

Individual investors in the countries where the GDRs are issued buy them to diversify into international markets. GDRs let you do this without having to deal with currency conversion and other complications of overseas investing.

However, since GDRs are frequently offered by newer or less-known companies, the prices are often volatile and the stocks may be thinly traded. That makes buying GDRs riskier than buying domestic stocks.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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