Government Securities Market in India – A Primer: Understanding Bonds

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What type of instrument is a bond?

Equity instrument

Hybrid instrument

Derivative instrument

Debt instrument (correct)

Who are the owners of bonds considered to be?

Shareholders

Lenders

Lessees

Debt holders (correct)

What distinguishes Government Securities (G-Secs) from Treasury Bills (T-bills)?

Risk level

Maturity period (correct)

Interest rate

Issuer

Which government entity issues both treasury bills and bonds in India?

Central Government only Signup and view all the answers

What is the primary characteristic of Government Securities (G-Secs) that makes them attractive to investors?

Practically no risk of default Signup and view all the answers

What is the main difference between Treasury bills and Dated G-Secs?

Treasury bills are issued at a discount and redeemed at face value, while Dated G-Secs pay interest on face value. Signup and view all the answers

What does the term 'zero coupon securities' mean in the context of Treasury bills?

It means that Treasury bills do not pay interest but are issued at a discount. Signup and view all the answers

What was the purpose of introducing Cash Management Bills (CMBs) by the Government of India in consultation with RBI?

To address temporary mismatches in the cash flow of the Government of India. Signup and view all the answers

What does a typical nomenclature of a dated fixed coupon G-Sec represent?

Coupon rate, name of issuer, maturity year Signup and view all the answers

Why are unique ISIN numbers assigned to each security at the time of issuance?

To avoid any misunderstanding among traders regarding the issuer. Signup and view all the answers

Government Securities Market in India – A Primer: Understanding Bonds

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Questions and Answers

What type of instrument is a bond?

Who are the owners of bonds considered to be?

What distinguishes Government Securities (G-Secs) from Treasury Bills (T-bills)?

Which government entity issues both treasury bills and bonds in India?

What is the primary characteristic of Government Securities (G-Secs) that makes them attractive to investors?

What is the main difference between Treasury bills and Dated G-Secs?

What does the term 'zero coupon securities' mean in the context of Treasury bills?

What was the purpose of introducing Cash Management Bills (CMBs) by the Government of India in consultation with RBI?

What does a typical nomenclature of a dated fixed coupon G-Sec represent?

Why are unique ISIN numbers assigned to each security at the time of issuance?

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