Treasury Bills (T-Bills)

Description: Treasury Bills (T-Bills) Quiz
Number of Questions: 15
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Tags: indian economics monetary policy reserve bank of india (rbi) treasury bills
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What is the primary purpose of issuing Treasury Bills (T-Bills)?

  1. To regulate the money supply in the economy

  2. To finance government expenditures

  3. To control inflation

  4. To stabilize the foreign exchange rate


Correct Option: A
Explanation:

T-Bills are short-term debt instruments issued by the government to regulate the money supply in the economy.

Who is responsible for issuing T-Bills in India?

  1. Reserve Bank of India (RBI)

  2. Ministry of Finance

  3. Securities and Exchange Board of India (SEBI)

  4. National Stock Exchange of India (NSE)


Correct Option: A
Explanation:

The Reserve Bank of India (RBI) is responsible for issuing T-Bills in India.

What is the typical maturity period of T-Bills?

  1. 14 days

  2. 91 days

  3. 182 days

  4. 364 days


Correct Option: B
Explanation:

The typical maturity period of T-Bills in India is 91 days.

What is the minimum amount required to invest in T-Bills?

  1. ₹10,000

  2. ₹25,000

  3. ₹50,000

  4. ₹1,00,000


Correct Option: B
Explanation:

The minimum amount required to invest in T-Bills in India is ₹25,000.

How are T-Bills traded in India?

  1. Over-the-counter (OTC) market

  2. Stock exchanges

  3. Both OTC market and stock exchanges

  4. None of the above


Correct Option: C
Explanation:

T-Bills are traded in India both in the over-the-counter (OTC) market and on stock exchanges.

What is the risk associated with investing in T-Bills?

  1. Default risk

  2. Interest rate risk

  3. Inflation risk

  4. Currency risk


Correct Option: A
Explanation:

T-Bills are considered to be very low-risk investments, as they are backed by the full faith and credit of the government. However, there is a small risk of default if the government is unable to repay its debts.

What is the rate of return on T-Bills?

  1. Fixed

  2. Variable

  3. Floating

  4. Zero


Correct Option: A
Explanation:

The rate of return on T-Bills is fixed at the time of issuance and remains constant until maturity.

How is the rate of return on T-Bills determined?

  1. By the Reserve Bank of India (RBI)

  2. By the Ministry of Finance

  3. By the market forces of demand and supply

  4. By a combination of the above factors


Correct Option: D
Explanation:

The rate of return on T-Bills is determined by a combination of factors, including the RBI's monetary policy, the government's fiscal policy, and the market forces of demand and supply.

What are the advantages of investing in T-Bills?

  1. Low risk

  2. Fixed rate of return

  3. High liquidity

  4. All of the above


Correct Option: D
Explanation:

T-Bills offer a number of advantages to investors, including low risk, a fixed rate of return, and high liquidity.

What are the disadvantages of investing in T-Bills?

  1. Low rate of return

  2. Short maturity period

  3. Lack of flexibility

  4. All of the above


Correct Option: D
Explanation:

T-Bills also have some disadvantages, including a low rate of return, a short maturity period, and a lack of flexibility.

Who are the typical investors in T-Bills?

  1. Individuals

  2. Banks

  3. Corporations

  4. All of the above


Correct Option: D
Explanation:

T-Bills are attractive to a wide range of investors, including individuals, banks, corporations, and other financial institutions.

How can T-Bills be used in portfolio management?

  1. As a safe haven asset

  2. As a short-term investment

  3. As a hedging instrument

  4. All of the above


Correct Option: D
Explanation:

T-Bills can be used in portfolio management in a variety of ways, including as a safe haven asset, a short-term investment, and a hedging instrument.

What is the impact of T-Bills on the economy?

  1. They help to regulate the money supply

  2. They help to control inflation

  3. They help to stabilize the foreign exchange rate

  4. All of the above


Correct Option: D
Explanation:

T-Bills have a number of positive impacts on the economy, including helping to regulate the money supply, control inflation, and stabilize the foreign exchange rate.

What are the recent trends in the T-Bill market in India?

  1. Increasing demand

  2. Decreasing supply

  3. Rising interest rates

  4. All of the above


Correct Option: D
Explanation:

The T-Bill market in India has been experiencing increasing demand, decreasing supply, and rising interest rates in recent years.

What are the future prospects for the T-Bill market in India?

  1. Continued growth

  2. Increased volatility

  3. Greater integration with the global market

  4. All of the above


Correct Option: D
Explanation:

The T-Bill market in India is expected to continue to grow in the future, with increased volatility and greater integration with the global market.

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