CSEET · Economic and Business Environment · Indian Financial Markets
Which statement about Treasury Bills (T-bills) in India is correct?
T-bills are short-term government securities issued at a discount to face value and redeemed at par, with tenors of 91, 182 and 364 days. The investor's return is the discount. They are not corporate paper, not perpetual, and not long-term securities.
- AThey are short-term government securities issued at a discount and redeemed at face valueCorrect
- BThey are issued by companies to meet working capital needs and pay a fixed coupon
- CThey are perpetual securities with no maturity date
- DThey are issued only for maturities above 10 years
Explanation
T-bills are issued by the Government of India (through the RBI) for short tenors, namely 91, 182 and 364 days. They are sold at a discount and redeemed at par, so the return is the difference. Company-issued paper is commercial paper, not T-bills, and long-dated securities are dated government securities.
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