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

A Treasury Bill is characterised by which of the following features?

A Treasury Bill is issued at a discount to face value and redeemed at par on maturity. It is a short-term government instrument with no periodic coupon, and the investor's return is the gap between issue price and face value.

  1. AIt is issued at a discount and redeemed at face valueCorrect
  2. BIt pays semi-annual coupons and is redeemed at a premium
  3. CIt has a maturity of ten years and a fixed coupon
  4. DIt is issued only by corporates to fund working capital

Explanation

Treasury Bills are short-term government money market instruments with no coupon. They are issued at a discount to face value and redeemed at par, so the return is the difference. Coupon-bearing, long-maturity features describe dated G-Secs.

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