Gujarat BoardEnglish MediumSTD 12 CommerceOCMFINANCIAL MARKET3 Marks
Question
What is Treasury Bills?
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Answer
Treasury bills :
Treasury bill is an important component all over the world for money market.
It is a financial instrument for short term.
The Reserve Bank of India issues it on behalf of Bharat Sarkar.
It contains the attribute of liquidity as its maturity date is either all days, or $182$ days or $364$ days.
No interest is paid on Treasury bill so Treasury bill is considered zero coupon bond.
Treasury bill is issued at discount and on maturity date redeemed at par e.g. treasury bill of $Rs. 50,000$ is issued at discount at $Rs. 45,000$ and on maturity investor is paid $Rs. 50,000.$
Difference of $Rs. 5000$ is the return of the investor.
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