Question

Which of the following is a reason a company might cross-list itself on a foreign stock exchange? A. It is required for accomplishing foreign direct investment. B. It is less expensive than listing itself solely on a domestic exchange. C. It wants to hedge against currency fluctuations. D. It wants to obtain acquisition currency for acquiring a foreign company.

Answer 1

Answer: D. It wants to obtain acquisition currency for acquiring a foreign company.

Step-by-step explanation:

If a company cross-lists itself on a foreign stock exchange, there is a good chance that it is trying to obtain acquisition currency in other to acquire a foreign company.

This is because Acquisition currency need not be in cash alone. It could be in shares as well meaning that the company can acquire another by using their shares as payment.

To accomplish this for a foreign company therefore, the company would have to cross list itself so that the shares of both companies can be valued in the same currency and can be easily traded during the acquisition.