Question

Gilt-edged market means?

A Gold market Correct Answer Incorrect Answer
B Government securities market Correct Answer Incorrect Answer
C High valued agriculture commodities market Correct Answer Incorrect Answer
D Market of oil bonds Correct Answer Incorrect Answer
E Foreign currency market Correct Answer Incorrect Answer

Solution

The term is of British origin, and then referred to the debt securities issued by the Bank of England, whose paper certificates had a gilt (or gilded) edge. Hence, they are known as gilt-edged securities. Since government cannot default on its payment obligations, the government securities are risk free and hence known as "gilt-edged" - which means 'of the best quality'.

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