Question : Which of the following statements is correct regarding the government securities in the economy?
I. It is a tradeable instrument issued by the Central or State Governments.
II. They are called risk-free, gilt-edged instruments.

Option 1: Neither I nor II

Option 2: Only I

Option 3: Only II

Option 4: Both I and II


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 19th Jan, 2024

Correct Answer: Both I and II


Solution : The correct option is Both I and II.

I. Government securities are debt instruments issued by the government to raise funds for various purposes. They are traded on the secondary market, allowing investors to buy and sell them before their maturity date.

II. While no investment is entirely risk-free, government securities are considered highly secure due to the low probability of the government defaulting on its debt. This low risk gives them the label "gilt-edged" instruments. However, risks, like interest rate fluctuations and changing government policies, can still affect their value.

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