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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

A client wants to buy Treasury Bills through a demat account. Which feature of Treasury Bills is correct?

Treasury Bills are issued by the government at a discount to face value and redeemed at par on maturity. They carry no periodic coupon and are short-term instruments, with maturities up to 364 days, so the investor's return is the discount gained.

  1. AThey are issued at a discount to face value and redeemed at parCorrect
  2. BThey pay semi-annual coupons and are redeemed at a premium
  3. CThey carry maturity of 10 to 40 years only
  4. DThey are issued only by corporates

Explanation

Treasury Bills are short-term government money market instruments issued at a discount and redeemed at face value; the return is the difference. They have no coupon, mature within one year (91, 182, 364 days), and are issued by the government.

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