Question : Statement 1: Treasury bills are short-term debt instruments issued by the government.
Statement 2: Treasury bills are long-term loans provided by commercial banks.
Option 1: Statement 1 is true, and statement 2 is true.
Option 2: Statement 1 is true, but statement 2 is false.
Option 3: Statement 1 is false, and statement 2 is true.
Option 4: Statement 1 is false, and statement 2 is false.
Correct Answer: Statement 1 is true, and statement 2 is true.
Solution : The correct answer is (a) Statement 1 is true, and statement 2 is true.
Statement 1 is true. Treasury bills are indeed short-term debt instruments issued by the government with maturities typically ranging from a few weeks to a year.
Statement 2 is true. Treasury bills can also be seen as short-term loans provided by individuals, institutions, or entities, including commercial banks, to the government. When someone purchases a Treasury bill, they are effectively lending money to the government for a specified period, and the government repays the principal along with interest upon maturity. In this sense, Treasury bills can be viewed as short-term loans provided by various entities, including commercial banks.
Question : Statement 1: Commercial paper is a type of long-term debt instrument.
Statement 2: Commercial paper is used by companies to raise short-term funds.
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