Government Securities Market in India – A Primer: Understanding Bonds
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Questions and Answers

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?

    <p>Central Government only</p> Signup and view all the answers

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

    <p>Practically no risk of default</p> Signup and view all the answers

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

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

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

    <p>It means that Treasury bills do not pay interest but are issued at a discount.</p> 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?

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

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

    <p>Coupon rate, name of issuer, maturity year</p> Signup and view all the answers

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

    <p>To avoid any misunderstanding among traders regarding the issuer.</p> Signup and view all the answers

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