Practicing Success
Practicing Success
CUET Preparation Today
| The RBI sells a financial asset to Raman. This financial asset is a short-term borrowing instrument. He bought it because of minimum risk and guaranteed profits. “Zero-Coupon Bond” is another name for this instrument. Which financial asset is mentioned here? |
Call money
Treasury bills
Commercial paper
Commercial bill |
| Treasury bills |
| 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. |
