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

Mr. Iyer holds 91-day Treasury Bills in his demat account. Which statement about Treasury Bills is correct?

Treasury Bills are short-term, zero-coupon government instruments issued at a discount to face value and redeemed at par. The investor's return is the difference between the discounted purchase price and the face value, with no periodic interest paid.

  1. AThey are issued at a discount and redeemed at face valueCorrect
  2. BThey pay half-yearly coupons and are redeemed at a premium
  3. CThey are issued only for tenors above 10 years
  4. DThey are issued by corporates to raise long-term capital

Explanation

Treasury Bills are zero-coupon short-term money market instruments issued by the Government of India. They are issued at a discount to face value and redeemed at par, the difference being the return. Coupon payment and corporate issuance do not apply, and tenors are 91, 182 and 364 days.

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