Which of the following is correct about the money market instrument Treasury Bill?

(A) A treasury bill is an instrument of short term borrowing by RBI

(B) The maturity period of a Treasury bill is more than one year

(C) Treasury bills are also known as Zero Coupon Bond

(D) Treasury bills are available for a minimum amount of ₹15,000

(E) Treasury bills are issued at a price which is more than their face value and repaid at par

Choose the correct answer from the options given below.

(A) and (C) Only

The correct answer is option 3- (A) and (C) Only.

(A) A treasury bill is an instrument of short term borrowing by RBI- THIS IS TRUE.

(B) The maturity period of a Treasury bill is more than one year- THIS IS FALSE a treasury bill is issued for less than 1 year.

(C) Treasury bills are also known as Zero Coupon Bond- THIS IS TRUE.

(D) Treasury bills are available for a minimum amount of ₹15,000- THIS IS FALSE as minimum amount is ₹25,000.

(E) Treasury bills are issued at a price which is more than their face value and repaid at par- THIS IS FALSE as treasury bill is issued which is less than face value.

A Treasury bill is basically an instrument of short-term borrowing by the Government of India maturing in less than one year. They are also known as Zero Coupon Bonds issued by the Reserve Bank of India on behalf of the Central Government to meet its short-term requirement of funds. Treasury bills are issued in the form of a promissory note. They are highly liquid and have assured yield and negligible risk of default. They are issued at a price which is lower than their face value and repaid at par. The difference between the price at which the treasury bills are issued and their redemption value is the interest receivable on them and is called discount. Treasury bills are available for a minimum amount of ₹25,000 and in multiples thereof.