📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

  • google app store apple app store
  • ✖

      Question

      Consider the following statements about government

      securities and derivatives: (I) Government Securities are risk-free gilt-edged instruments. (II) Derivatives are a type of Government Security. Which statement(s) is/are correct?
      A I only Correct Answer Incorrect Answer
      B II only Correct Answer Incorrect Answer
      C Both I and II Correct Answer Incorrect Answer
      D Neither I nor II Correct Answer Incorrect Answer

      Solution

      Government Securities, often referred to as gilt-edged securities, are considered risk-free because they are backed by the government. They include treasury bills and bonds with varying maturities. Derivatives, on the other hand, are financial instruments derived from other assets; they are not a type of Government Security and can carry significant risk.

      Practice Next

      Relevant for Exams:

      ask-question