Question
Which one of the following is/are True about the
difference between Bonds and Treasury Bills? I- maturities less than 1 year are called T-bills and those more than one year are called bonds. II- T-bills are issued at a discount to their true (PAR) value and upon expiry, its redeemed at its true value. III- T-bills can’t be bought by Individuals.Solution
G-Secs is a collective term for these two types of securities: maturities less than 1 year are called T-bills and those more than one year are called bonds. There are three T-bills variants and they vary based on the maturity period. They are 91 days, 182 days, and 364 days. T-bills do not carry an interest component, in fact, this is one of the biggest differences between T-bills and Bonds. T-bills are issued at a discount to their true (PAR) value and upon expiry, its redeemed at its true value.
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