Question

A Treasury Bill is basically:
a. An instrument to borrow short-term funds
b. An instrument to borrow long-term funds
c. An instrument of capital market
d. None of the above

Answer 1

Answer:

A Treasury Bill is basically : An instrument to borrow short-term funds

Among the given options option (a) An instrument to borrow short-term funds is the correct answer.

Explanation:

The Government of India issued Treasury Bill (T - bills) . RBI issues Treasury Bill (T - bills) on the behalf of Government of India. It is also known as zero coupon bonds. Treasury Bill (T - bills) has a maturity of less than 1 year. This bill is available in the denominations of ₹ 25000 and its multiples.

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Answer 2

Answer:

When the government chooses to raise money from financial market, it can be done through two types of debt instruments – treasury bills and government bonds. Treasury bills are issued when the government needs money for a shorter period while bonds are issued when it need finance for more than five years.

Treasury bills:

Generally called as T-bills, have a maximum maturity period of 364 days. They are categorized as money market instruments.