Question
How can one earn by investing in treasury bills?

Answer

  • Government does not pay any interest to people who buy $T-$bills, but sells these bills at a discounted rate.
  • For example, government might sell treasury bill of $₹ 25,000$ at $₹ 23,500$ to the investor. The investor would then be paid the actual value i.e. $₹ 25,000$ on maturity date.
  • Thus, the difference between the purchase amount and redemption amount becomes the profit for the investor.

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