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Consider the following statements regarding Government securities, or G-secs.
1. Government securities are debt instruments that the government issues to borrow funds.
2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.
3. Dated securities are short-term investments that expire in less than a year.
4. G-secs are not tax-free like bank fixed deposits.
Which of the above statements is/are correct?
- a)1, 2, 3
- b)1, 4
- c)1, 2, 4
- d)1, 2, 3, 4
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
Consider the following statements regarding Government securities, or ...
- The Reserve Bank of India (RBI) recently said that it will give small investors direct access to its government securities trading platform.
What are government securities, or g-secs?
These are debt instruments issued by the government to borrow money. The two key categories are treasury bills – short-term instruments that mature in 91 days, 182 days, or 364 days, and dated securities – long-term instruments that mature anywhere between 5 years and 40 years.
But can't retail investors already invest in g-secs?
Small investors can invest indirectly in g-secs by buying mutual funds or certain life insurance firms' policies.
So what is the need for the current proposal, then?
The g-sec market is dominated by institutional investors such as banks, mutual funds, and insurance companies. These entities trade in lot sizes of Rs 5 crore or more.
So, there is no liquidity in the secondary market for small investors who would want to trade in smaller lot sizes.
Like bank fixed deposits, g-secs are not tax-free.
They are generally considered the safest form of investment because the government backs them. So, the risk of default is almost nil.
However, they are not completely risk free, since they are subject to fluctuations in interest rates.
Most Upvoted Answer
Consider the following statements regarding Government securities, or ...
Government Securities (G-secs)
Government securities, or G-secs, are debt instruments issued by the government to borrow funds from the public. These securities play a crucial role in the financial markets and are considered safe investments due to the creditworthiness of the government. Let's evaluate the given statements to determine their correctness:
1. Government securities are debt instruments that the government issues to borrow funds.
This statement is correct. Government securities are issued by the government as a way to raise funds to finance its various activities and meet its expenditure requirements. These securities are typically issued in the form of bonds or treasury bills.
2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.
This statement is incorrect. Treasury bills, also known as T-bills, are short-term debt instruments with maturities ranging from 91 days to 364 days. They are typically issued at a discount to their face value and do not pay any coupon or interest. Investors earn a return by buying T-bills at a discount and receiving the full face value at maturity.
3. Dated securities are short-term investments that expire in less than a year.
This statement is incorrect. Dated securities are long-term debt instruments issued by the government with maturities generally ranging from 5 years to 40 years. These securities pay periodic interest, known as coupon payments, to the investors and the principal amount is repaid at maturity.
4. G-secs are not tax-free like bank fixed deposits.
This statement is correct. While bank fixed deposits may enjoy tax benefits under certain conditions, G-secs are subject to taxation. The interest earned from government securities is taxable as per the income tax laws of the country.
Conclusion
Based on the evaluation of the given statements, the correct option is B - 1, 4. Government securities are debt instruments issued by the government to borrow funds, and they are not tax-free like bank fixed deposits. Treasury bills are short-term investments, while dated securities are long-term investments.
Government securities, or G-secs, are debt instruments issued by the government to borrow funds from the public. These securities play a crucial role in the financial markets and are considered safe investments due to the creditworthiness of the government. Let's evaluate the given statements to determine their correctness:
1. Government securities are debt instruments that the government issues to borrow funds.
This statement is correct. Government securities are issued by the government as a way to raise funds to finance its various activities and meet its expenditure requirements. These securities are typically issued in the form of bonds or treasury bills.
2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.
This statement is incorrect. Treasury bills, also known as T-bills, are short-term debt instruments with maturities ranging from 91 days to 364 days. They are typically issued at a discount to their face value and do not pay any coupon or interest. Investors earn a return by buying T-bills at a discount and receiving the full face value at maturity.
3. Dated securities are short-term investments that expire in less than a year.
This statement is incorrect. Dated securities are long-term debt instruments issued by the government with maturities generally ranging from 5 years to 40 years. These securities pay periodic interest, known as coupon payments, to the investors and the principal amount is repaid at maturity.
4. G-secs are not tax-free like bank fixed deposits.
This statement is correct. While bank fixed deposits may enjoy tax benefits under certain conditions, G-secs are subject to taxation. The interest earned from government securities is taxable as per the income tax laws of the country.
Conclusion
Based on the evaluation of the given statements, the correct option is B - 1, 4. Government securities are debt instruments issued by the government to borrow funds, and they are not tax-free like bank fixed deposits. Treasury bills are short-term investments, while dated securities are long-term investments.
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Consider the following statements regarding Government securities, or G-secs.1. Government securities are debt instruments that the government issues to borrow funds.2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.3. Dated securities are short-term investments that expire in less than a year.4. G-secs are not tax-free like bank fixed deposits.Which of the above statements is/are correct?a)1, 2, 3b)1, 4c)1, 2, 4d)1, 2, 3, 4Correct answer is option 'B'. Can you explain this answer?
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Consider the following statements regarding Government securities, or G-secs.1. Government securities are debt instruments that the government issues to borrow funds.2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.3. Dated securities are short-term investments that expire in less than a year.4. G-secs are not tax-free like bank fixed deposits.Which of the above statements is/are correct?a)1, 2, 3b)1, 4c)1, 2, 4d)1, 2, 3, 4Correct answer is option 'B'. Can you explain this answer? for Current Affairs 2024 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about Consider the following statements regarding Government securities, or G-secs.1. Government securities are debt instruments that the government issues to borrow funds.2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.3. Dated securities are short-term investments that expire in less than a year.4. G-secs are not tax-free like bank fixed deposits.Which of the above statements is/are correct?a)1, 2, 3b)1, 4c)1, 2, 4d)1, 2, 3, 4Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Current Affairs 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Government securities, or G-secs.1. Government securities are debt instruments that the government issues to borrow funds.2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.3. Dated securities are short-term investments that expire in less than a year.4. G-secs are not tax-free like bank fixed deposits.Which of the above statements is/are correct?a)1, 2, 3b)1, 4c)1, 2, 4d)1, 2, 3, 4Correct answer is option 'B'. Can you explain this answer?.
Consider the following statements regarding Government securities, or G-secs.1. Government securities are debt instruments that the government issues to borrow funds.2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.3. Dated securities are short-term investments that expire in less than a year.4. G-secs are not tax-free like bank fixed deposits.Which of the above statements is/are correct?a)1, 2, 3b)1, 4c)1, 2, 4d)1, 2, 3, 4Correct answer is option 'B'. Can you explain this answer? for Current Affairs 2024 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about Consider the following statements regarding Government securities, or G-secs.1. Government securities are debt instruments that the government issues to borrow funds.2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.3. Dated securities are short-term investments that expire in less than a year.4. G-secs are not tax-free like bank fixed deposits.Which of the above statements is/are correct?a)1, 2, 3b)1, 4c)1, 2, 4d)1, 2, 3, 4Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Current Affairs 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Government securities, or G-secs.1. Government securities are debt instruments that the government issues to borrow funds.2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.3. Dated securities are short-term investments that expire in less than a year.4. G-secs are not tax-free like bank fixed deposits.Which of the above statements is/are correct?a)1, 2, 3b)1, 4c)1, 2, 4d)1, 2, 3, 4Correct answer is option 'B'. Can you explain this answer?.
Solutions for Consider the following statements regarding Government securities, or G-secs.1. Government securities are debt instruments that the government issues to borrow funds.2. Treasury bills are long-term investments with maturities ranging from 5 to 40 years.3. Dated securities are short-term investments that expire in less than a year.4. G-secs are not tax-free like bank fixed deposits.Which of the above statements is/are correct?a)1, 2, 3b)1, 4c)1, 2, 4d)1, 2, 3, 4Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Current Affairs.
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