Answer: like ordinary shares on the investors' local exchanges.

## Explanation Depositary receipts (DRs) are financial instruments that represent ownership in shares of a foreign company. They are created to facilitate trading of foreign securities in local markets. The key characteristics of depositary receipts are: 1. **Trading on local exchanges**: Depositary receipts trade on the investors' local exchanges, not on the company's home exchange. This allows investors to buy and sell foreign securities using their local trading infrastructure. 2. **Like ordinary shares**: DRs trade like ordinary shares on the local exchange, with the same trading mechanisms, settlement procedures, and regulatory framework as domestic securities. 3. **Currency**: DRs are typically denominated in the local currency of the exchange where they trade, not in the company's home currency. This eliminates foreign exchange risk for local investors. 4. **Structure**: A depositary bank holds the underlying shares and issues receipts that represent ownership of those shares. These receipts then trade on local exchanges. **Why option A is correct**: - DRs are designed to trade on investors' local exchanges, making foreign securities accessible to local investors - They trade like ordinary shares with local market conventions - Examples include American Depositary Receipts (ADRs) trading on US exchanges and Global Depositary Receipts (GDRs) trading on European exchanges **Why option B is incorrect**: - DRs do not trade on the company's local exchange; they trade on foreign exchanges - They are not denominated in the company's local currency for foreign investors **Why option C is incorrect**: - While DRs trade on investors' local exchanges, they are denominated in the local currency of those exchanges, not in the company's currency - This currency conversion is a key benefit of DRs for foreign investors **Real-world example**: A Chinese company's ADRs trade on the NYSE in US dollars, following US trading rules and settlement procedures, making them accessible to US investors without dealing with Chinese currency or trading systems.

Author: LeetQuiz .