Explanation

Depositary receipts (DRs) are negotiable certificates that represent ownership in shares of a foreign company. They are designed to facilitate trading of foreign securities in local markets. The key characteristics are:

1. Trading Location: DRs trade on investors' local exchanges, not on the company's home exchange.
2. Currency: They trade in the local currency of the investors' market, not in the company's home currency.
3. Trading Mechanics: They trade like ordinary shares on the local exchange where they are listed.

Analysis of Options:

• Option A: Correct. DRs trade like ordinary shares on investors' local exchanges, making them accessible to local investors.
• Option B: Incorrect. DRs do not trade on the company's local exchange; they trade on foreign exchanges.
• Option C: Incorrect. DRs trade in the local currency of the investors' market, not in the company's currency.

Key Concept: Depositary receipts allow investors to invest in foreign companies without dealing with foreign exchange transactions, foreign market regulations, or cross-border settlement issues. They are priced in the local currency and settle according to local market conventions.