Question : Which of the following is a feature of a treasury bill?
Option 1: High credit risk
Option 2: High interest rate
Option 3: Fixed maturity period
Option 4: No liquidity risk
Correct Answer: No liquidity risk
Solution : The correct answer is (d). No liquidity risk.
A treasury bill is a short-term debt instrument issued by the government to raise funds. They are typically issued with maturities ranging from a few days to one year. Treasury bills are considered highly liquid investments. They are actively traded in the secondary market, and investors can buy or sell them before their maturity date with ease. The high liquidity of treasury bills means that investors generally do not face significant challenges in converting them into cash when needed.
