NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Fixed Income Securities (NISM XXI-A)
Which of the following is generally considered to carry the lowest credit risk among Indian fixed income securities?
Treasury bills issued by the Government of India carry the lowest credit risk. They are sovereign obligations treated as having negligible default risk, whereas corporate debentures, NBFC commercial paper and subordinated bank bonds all depend on the issuer's creditworthiness.
- AUnsecured corporate debentures of a mid-sized firm
- BTreasury bills issued by the Government of IndiaCorrect
- CCommercial paper issued by an NBFC
- DSubordinated bonds of a private bank
Explanation
Government of India securities, including treasury bills, are sovereign obligations and are treated as having negligible default risk. Corporate, NBFC and subordinated instruments carry issuer credit risk.
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