364-day t-bills, Financial Management

Assignment Help:

364-Day T-Bills

The Government considered that it is important to develop government securities market for monetary control. It also had an intention to ensure that government's credit needs are met more and more directly from the market instead of pre-emption of deposit resources. With this view, treasury bill was developed as a monetary instrument with market related rates. As a part of the overall development of Government securities market, the Government of India proposes to float treasury bills of varying maturities up to 364 days on auction basis.

The Government, with an intention to stabilize the money market in the country, introduced the 364-day T-bills on 28th April, 1992. The RBI neither discounted these bills nor participated in the auction. 364-day T-Bills are auctioned fortnightly, but the amount, however, is not notified in advance. These T-bills have become popular due to their higher yield coupled with liquidity and safety. The yield on 364-day T-bills is used as a benchmark by the financial institutions such as IDBI, ICICI, etc., for determining the rate of interest on floating bonds/notes. These bills widened the scope of money market and provided an innovative outlet for surplus funds. The introduction on treasury bills of varying maturities would offer investors a wider choice for investing in different instruments and thereby foster the development of Government securities market.

 


Related Discussions:- 364-day t-bills

Cost of capital, what is the cost of capital and advantages of it?

what is the cost of capital and advantages of it?

Calculate the interest rate on the investment, Jessica is given the opportu...

Jessica is given the opportunity to invest $5,000 now and receive $5,700 at the end of one year. However, she could only invest $1,000 of her own money and would need to borrow the

Estimate the total rate of return, Question: Explain: (a) the advant...

Question: Explain: (a) the advantages and disadvantages, to a company, of debt finance over equity finance; (b) the reasons why a company may choose to issue preference s

What do you mean by utility, Q. What do you mean by Utility? Utility: -...

Q. What do you mean by Utility? Utility: - Financial leverage assists considerably the financial manager while devising the capital structure of the company. A high financial l

Cost of capital , ABC Ltd. Produces electronic components with a selling pr...

ABC Ltd. Produces electronic components with a selling price per of Rs.100. Fixed cost amount to Rs.2,00,000/- 5000 units are produced and sold each year. Annua

Yield curve risk, The graphical representation of the relationship between ...

The graphical representation of the relationship between yield and maturity is known as yield curve. Yield curve risk is the risk of experiencing an adverse

Characteristics of hedge funds, Characteristics of Hedge Funds Hedge Fu...

Characteristics of Hedge Funds Hedge Funds are commonly referred to as "absolute return strategies", which means that many are designed to seek positive returns in most market

#tFuture Value, You deposit $3,000 in a back account that pays 10% annually...

You deposit $3,000 in a back account that pays 10% annually, how much would you have im your account after 5 years?

Optimal portfolio selection, Optimal Portfolio Selection: The next step...

Optimal Portfolio Selection: The next step involves selecting the optimal portfolio. The strategic asset allocation will have overriding importance in pension fund management.

Benefits of going private company, Benefits of Going private company A...

Benefits of Going private company A public company has its shares purchased by a small group of people and ceases to be listed on stock exchange. This has many benefits includ

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd