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

Which of the following statements about Treasury Bills (T-Bills) is correct?

Treasury Bills are issued at a discount to face value and redeemed at par on maturity. They are short-term, zero-coupon government instruments with maturities of 91, 182 or 364 days, so the gain is the difference between issue price and face value.

  1. AThey are issued at face value and repaid with a coupon at maturity
  2. BThey are issued at a discount to face value and redeemed at parCorrect
  3. CThey are long-term securities with maturity over 10 years
  4. DThey are issued only by corporates to raise working capital

Explanation

T-Bills are zero-coupon short-term money market instruments issued by the Government of India. They are issued at a discount and redeemed at face value, with maturities of 91, 182 or 364 days. The first option is wrong because they carry no coupon.

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