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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Fixed Income Securities (NISM XXI-A)

Which of the following is a feature of a Treasury Bill issued by the Government of India?

A Treasury Bill is issued at a discount and redeemed at face value. It is a short-term government money market instrument with maturities of 91, 182 or 364 days, pays no periodic coupon, and has virtually no default risk because of sovereign backing.

  1. AIt pays a half-yearly coupon
  2. BIt is issued at a discount and redeemed at face valueCorrect
  3. CIt has a maturity of 10 years
  4. DIt carries significant default risk

Explanation

Treasury bills are short-term money market instruments, issued at a discount to face value and redeemed at par, with maturities of 91, 182 or 364 days. They pay no coupon and carry sovereign backing, so default risk is negligible.

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