Question

Volvo, the Swedish car maker, wants to trade both in the U.S. on the NASDAQ and in Sweden on the Stockholm Stock Exchange. What instrument could you advise Volvo to meet this purpose? What are the advantages of the advised instrument?

Answer 1

Global depositary receipt(GDR) can be used to get listed on NASDAQ in US and can trade its shares in US and list its shares on stocckholm stock exchange as its a domestic company of sweden  . A GDR is a security in which a domestic country issues one or more of its shares or Bonds outside the domestic country.

Advantatges of Global depositary receipt are as follows;
1) GDR increase the share holder base of the company by accessing the international markets and bringing in investors from all over the world.

2) GDR instruments are freely transferable and liquid.

3) With GDR non-residents of the can also invest in the shares of the company.

4) Valuation of shares in Domestic market increase when the company list and trades its share on foreign stock exchanges