Examkin

Question

Difficulty: EasyPublic Debt Types and Management

Which of the following financial instruments is issued by the government to borrow short-term funds from the money market?

  1. Treasury billsAnswer
  2. B
    Development stocks
  3. C
    Treasury bonds
  4. D
    Infrastructure bonds

Answer

Treasury bills
Treasury bills are short-term public debt instruments issued by the monetary authority on behalf of the government to cover short-term revenue shortfalls. They mature within 91, 182, or 364 days, making them a primary money market instrument.

Step-by-Step Solution

1
Identify the timeframe of the debt instrument requested
The question asks for a short-term borrowing instrument used by the government.
Public debt instruments are categorized by maturity duration into money market (short-term, usually under 1 year) and capital market (long-term) instruments.
2
Evaluate the financial instruments provided
Treasury bills are short-term instruments issued by the Central Bank on behalf of the government, maturing within 91 to 364 days.
Bonds and development stocks are long-term debt instruments belonging to the capital market.

Key Concept

Classification of Government Debt Instruments by Maturity
Estimated Time:45s
Rate this question

Topics

Public Debt Types and Management

More questions from this topic