CA Foundation · Business Economics · Money Market
Which of the following is a feature of the Treasury Bill as a money market instrument in India?
A Treasury Bill is issued at a discount and redeemed at face value. The investor's return is the gap between the two prices, with no periodic coupon. T-bills are short-term government instruments with maturities of 91, 182 or 364 days.
- AIt is issued at a discount and redeemed at face valueCorrect
- BIt pays a fixed half-yearly coupon
- CIt has a maturity of 10 years
- DIt is issued only by commercial banks
Explanation
Treasury Bills are short-term government securities issued at a discount to face value and redeemed at par, so the return is the difference. They carry no coupon, and their maturities are 91, 182 and 364 days. They are issued by the Government of India through the RBI, not by commercial banks.
Did you get it right without looking?
One question tells you little. A timed set on Money Market shows your real accuracy, how long you take and where you lose marks.
More Money Market questions
- In the Indian money market, funds that are borrowed and lent for a period of just one day (overnight) are known as:
- Which of the following statements about the call money market is correct?
- Which of the following is NOT a characteristic of money market instruments?
- Meera Textiles needs short-term funds for 60 days and has a well-rated, unsecured promissory note it wants to sell to investors directly, wi…
- Which of the following participants is typically EXCLUDED from participating directly in the call money market?
- Banks in an economy have a required reserve ratio of 10%, and the public holds no cash (all money is redeposited). The central bank injects …