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

Which of the following best describes a Treasury Bill issued by the Government of India?

A Treasury Bill is a short-term government money market instrument issued at a discount and redeemed at face value, with maturities of 91, 182 or 364 days. It carries no periodic coupon; the return is the discount gained.

  1. AA short-term money market instrument issued at a discount and redeemed at face valueCorrect
  2. BA long-term bond paying semi-annual coupons for 10 years
  3. CA floating rate instrument whose coupon resets every six months
  4. DAn instrument that pays interest monthly and never matures

Explanation

T-Bills are zero coupon short-term instruments with maturities of 91, 182 or 364 days. They are issued at a discount to face value and redeemed at par, with the difference being the investor's return. Coupon-paying long bonds and floating rate bonds are different instruments.

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