Quiz on T-bills, Commercial Paper and Certificate of Deposit

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Topic: Quiz on T-bills, Commercial Paper, Certificate of Deposit

Number of Questions: 15

Pre-Readings: All about T-bills vs Commercial Paper vs Certificate of Deposit

1. Who issues a Treasury bills?
   A) Reserve Bank of India
   B) Government of India
   C) Public Sector Banks
   D) Both B and C
   
   View answer

     Option B
   Explanation: Treasury bills or T-bills, which are money market instruments, are short term debt instruments issued by the Government of India
2. Which of the following is not a valid tenor of Treasury bills?
   A) 182 days
   B) 91 days
   C) 365 days
   D) 364 days
   
   View answer

     Option C
   Explanation: Available in three tenor: 91 day, 182 day and 364 day.
3. T-Bills are a type of ________ .
   A) floating coupon securities
   B) zero coupon securities
   C) Amortizing Bond
   D) sinkable bond
   
   View answer

   Option B
   Explanation: T-Bills are zero coupon securities and pay no interest. They are issued at a discount and redeemed at the face value at maturity.
4. Which of these instruments have generic character of T-bills but are issued for maturities less than 91 days?
   A) Commercial Papers
   B) Commercial Management Bills
   C) Cash Management Bills
   D) Certificate of Deposit
   
   View answer

   Option C
   Explanation:
5. Treasury Bills can be purchased for a minimum amount of?
   A) Rs 20,000
   B) Rs 50,000
   C) Rs 25,000
   D) Rs 5,000
   
   View answer

   Option C
   Explanation: Minimum Rs 25,000 and its multiple thereon.
6. Which of these money market instrument serves the purpose for Corporates?
   A) Certificate of Deposits
   B) Commercial Papers
   C) Treasury Bills
   D) Cash Management Bills
   
   View answer

   Option C
   
7. A corporate would be eligible to issue Commercial Paper if its tangible net worth is greater than _____ .
   A) Rs 1 crore
   B) Rs 2 crore
   C) Rs 3 crore
   D) Rs. 4 crore
   
   View answer

   Option D
   Explanation: the tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs. 4 crore
8. What is the minimum maturity tenor of a Commercial Paper?
   A) 1 day
   B) 7 days
   C) 81 days
   D) 14 days
   
   View answer

   Option B
   Explanation: Minimum 7 days
9. What is the maximum maturity tenor of a Commercial Paper?
   A) 3 years
   B) 1 year
   C) 2 years
   D) 5 years
   
   View answer

   Option B
   Explanation:
10. What is the minimum denomination for which Commercial paper can be issued?
    A) Rs 1 lakh
    B) Rs 5 lakh
    C) Rs 10 lakh
    D) Rs 20 lakh
    
    View answer

    Option B
    Explanation: Minimum Rs 5 lakh or multiple thereof.
11. A Certificate of Deposit can be issued by?
    A) Scheduled commercial banks
    B) Regional Rural Banks
    C) Reserve Bank of India
    D) Both A and C
    
    View answer

      Option A
    Explanation: CDs can be issued by:- scheduled commercial banks {excluding Regional Rural Banks and Local Area Banks}; and select All-India Financial Institutions (FIs)

12. What is the minimum denomination for which Certificate of Deposit can be issued?
    A) Rs 1 lakh
    B) Rs 5 lakh
    C) Rs 3 lakh
    D) Rs 10 lakh
    
    View answer

    Option A
    Explanation: Minimum amount of a CD should be Rs.1 lakh and its multiple thereon.
13. What is the minimum maturity tenor of a Certificate of Deposit?
    A) 14 days
    B) 1 day
    C) 7 days
    D) 30 days
    
    View answer

    Option C
    Explanation:
14. What is the maximum maturity tenor of a Certificate of Deposit Issued by Banks?
    A) 30 days
    B) 1 years
    C) 2 years
    D) 3 years
    
    View answer

    Option B
    Explanation: When Issued by Banks- 7 days to 1 year
15. What is the maximum maturity tenor of a Certificate of Deposit when issued by Financial Institutions (FIs)?
    A) 30 days
    B) 1 years
    C) 2 years
    D) 3 years
    
    View answer

    Option D
    Explanation: When Issued by Financial Institutions (FIs): 1 year to 3 years

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