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A) A company’s ADR is quoting at a discount of 20% to its domestic share price

Accounting

A) A company’s ADR is quoting at a discount of 20% to its domestic share price. In order to rationalize the market, the company proposes a buyback of ADRs. The company’s CFO says that it would increase the residual debt equity ratio of the company beyond 2:1. The company’s investment banker maintains  that this regulation does not apply to buyback of ADRs. Who is right?

(a) Investment Banker       (b) CFO

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