Which of the following instruments allows buying and selling the shares of a foreign company without opening a demat account?

Correct option is B

The correct answer is (b) Indian Depository Receipt (IDR)
Explanation:
• An Indian Depository Receipt (IDR) is a financial instrument denominated in Indian Rupees, allowing Indian investors to invest in the shares of a foreign company.
• The foreign company deposits its shares with an Overseas Custodian Bank, which then authorizes a Domestic Depository in India to issue receipts against those shares.
• This allows an Indian citizen to trade in a foreign company's equity through the Indian stock exchanges (NSE/BSE).
• It eliminates the need for the investor to open a foreign demat account or deal with foreign currency directly.
• Standard Chartered PLC was the first global company to issue IDRs in the Indian market.
Information Booster:
• Depository Receipts (DRs) are negotiable financial instruments that represent securities of a foreign company.
• They facilitate cross-border movement of capital and provide investors with global diversification.
Additional Knowledge:
(a) Special Drawing Rights (SDR) (Option a)
• SDR is an international reserve asset created by the IMF (International Monetary Fund) to supplement member countries' official reserves. It is not a share-trading instrument.
(c) Global Depository Receipt (GDR) (Option c)
• A GDR allows Indian companies to raise capital from international markets (like London or Luxembourg) by issuing shares to foreign investors.
(d) Exchange Traded Fund (ETF) (Option d)
• An ETF is a basket of securities that trades on an exchange like a stock. While some ETFs track foreign indices, they are not the specific instrument for buying direct "shares" of a foreign company as a receipt.