ECONOMICS (CBSE/UGC NET)

ECONOMICS

FINANCIAL MARKETS

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Suraj wanted to invest Rs 20000 in treasury bills for a period of 91 days. When he approached the RBI for this purpose he came to know that it was not possible. Identify the reason why?
A
the Day was Saturday ____
B
minimum value of investment in Treasury bills is 25000
C
this work will be done by SBI not by RBI
D
minimum value of investment in Treasury bills is more than 20000
Explanation: 

Detailed explanation-1: -They are issued at a discount and redeemed at the face value at maturity. For example, a 91 day Treasury bill of Rs. 100/-(face value) may be issued at say Rs. 98.20, that is, at a discount of say, Rs. 1.80 and would be redeemed at the face value of Rs.

Detailed explanation-2: -As per the regulations put forward by the RBI, a minimum of Rs. 25, 000 has to be invested by individuals willing to procure a short term treasury bill. Furthermore, any higher investment has to be made in multiples of Rs. 25, 000. G-Sec treasury bills don’t yield any interest on total deposits.

Detailed explanation-3: -The maximum maturity period of a T-bill is 364 days. So, as an investor, you don’t have to wait for years for the T-bill to mature. Additionally, T-bills are tradable on the secondary market. This allows investors to turn their investments into cash in a crisis.

Detailed explanation-4: -Formulas to be used. b = r / y. a = ( r / 2y )-0.25. Begin by Solving for a. a = ( r / 2y )-0.25. / )- 0.814% * 0.248630136986301. 0.498630136986301. Calculate Coupon Equivalent Yield. In order to calculate the Coupon Equivalent Yield on a Treasury Bill you must first solve for the intermediate variables in the equation.

There is 1 question to complete.