Beruflich Dokumente
Kultur Dokumente
MANAGEMENT
Foreign Sources of Finance
INTRODUCTION
• Countries like India have to depend on foreign capital for financing their
development programs as they suffer from low level of income and low level of
capital accumulation.
• The degree of dependence varies from country to country depending upon its
level of mobilization of domestic capital, technology development.
ADR
GDR
AMERICAN DEPOSITARY RECEIPT (ADR)
• A negotiable certificate issued by a U.S. bank representing a specified number of
shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are
denominated in U.S. dollars, with the underlying security held by a U.S. financial
institution overseas. ADRs help to reduce administration and duty costs that would
otherwise be levied on each transaction.
CON’S OF FCCB:
• FCCB’s are considered to be perfect source of financing in the rising market. This
is mainly because investors will get the opportunity to take advantage of price
rise in case of conversion.
• Company issuing FCCB’s will face exchange risk, simply because the repayment
to bond holders will be done in foreign currency, which are quiet volatile.
• FCCB’s will be shown as debt in the company’s books until they are completely
redeemed or converted. This would impact the debt equity ratio of the
company.
Thank You