DEPOSITORY RECEIPT Meaning and
Definition
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A depository receipt, also known as a DR, is a financial instrument that allows investors to trade shares of foreign companies on their local stock exchanges. It is a certificate issued by a depository bank, representing a specific number of shares of a foreign company held by the bank.
Depository receipts are designed to facilitate cross-border investment by providing an opportunity for investors to diversify their portfolios and gain exposure to foreign markets without the need for direct ownership of foreign securities. They allow investors to buy and sell shares of foreign companies in their local currency, eliminating the need for foreign currency transactions and reducing currency risk.
There are two main types of depository receipts: American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). ADRs are issued by banks in the United States and trade on U.S. stock exchanges, while GDRs are issued by banks outside the United States and trade on international exchanges.
Investors can purchase depository receipts in the same way they would buy shares of a domestic company, through stockbrokers or online trading platforms. These receipts offer the same rights and benefits as the underlying shares, such as dividends and voting rights. They also provide transparency and liquidity, as they are listed on stock exchanges and subject to regulatory oversight.
Overall, depository receipts serve as a bridge between investors and foreign companies, allowing for increased access and participation in global investment opportunities.
Common Misspellings for DEPOSITORY RECEIPT
- sepository receipt
- xepository receipt
- cepository receipt
- fepository receipt
- repository receipt
- eepository receipt
- dwpository receipt
- dspository receipt
- ddpository receipt
- drpository receipt
- d4pository receipt
- d3pository receipt
- deoository receipt
- delository receipt
- de0ository receipt
- depisitory receipt
- depksitory receipt
- deplsitory receipt
- deppsitory receipt
- dep0sitory receipt
Etymology of DEPOSITORY RECEIPT
The word "depository receipt" is derived from two main components: "depository" and "receipt".
- "Depository" comes from the Latin verb "deponere", which means "to put down" or "to deposit". It evolved from the combination of "de" (down) and "ponere" (to put or place). The term "depository" refers to a place or institution where something is deposited or held in safekeeping, such as a bank or a financial institution.
- "Receipt" originated from the Old North French word "recete", which meant "to receive". It ultimately traces back to the Latin verb "recipere", which has the same meaning. Over time, "receipt" has come to denote a written acknowledgement or record of something received, typically used in commercial transactions or financial dealings.
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