Question

A Government Security (G-Sec)

• A. is a tradeable instrument issued by the Central Government
• B. is a tradeable instrument issued by State Governments
• C. can have maturity of only more than one year
• D. cannot be considered as ‘gilt-edged’ instrument

Hint:

Government Securities (G-Secs) are low-risk debt instruments issued by the government, often considered "gilt-edged" due to their low default risk.

Answer 1

The Correct Option is A, B

Step 1: Understand what a Government Security (G-Sec) is.
A Government Security (G-Sec) is a debt instrument issued by the government to raise funds for various expenditures. It can be issued by the Central Government or State Governments, but the term "G-Sec" typically refers to securities issued by the Central Government.
Step 2: Evaluate the options.
- (A) is a tradeable instrument issued by the Central Government: This is correct. G-Secs are generally issued by the Central Government and are tradeable.
- (B) is a tradeable instrument issued by State Governments: This is incorrect, as State Governments issue State Development Loans (SDLs), not G-Secs.
- (C) can have maturity of only more than one year: This is not necessarily true, as G-Secs can have varying maturities, including short-term and long-term securities.
- (D) cannot be considered as a ‘gilt-edged’ instrument: This is incorrect, as G-Secs are considered "gilt-edged" instruments due to their low-risk nature.
Step 3: Conclusion.
The correct answer is (A). Final Answer: (A) is a tradeable instrument issued by the Central Government