Question Bank - Banking & Financial Services

Here's the question bank on all the banking & financial services topics.

Which of the following are called gilt edged securities?

A.
Shares of Public Limited companies
B.
Stocks of Mutual Funds
C.
Government Securities
D.
Shares of Private Limited companies

Solution:

The correct answer is Government Securities. Gilt-edged securities are high-grade bonds issued by certain national governments. Government security means a security created and issued by the Government for the purpose of raising a public loan or for any other purpose. Gilt-edged securities are favoured by investors who seek predictable returns, with little risk of default. These investments carry similar traits as United States Treasury securities. Gilt-edged securities are used to maintain SLR. Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement that the commercial banks in India require to maintain in the form of gold, government approved securities before providing credit to the customers. SLR is determined by the Reserve Bank of India maintained by banks in order to control the expansion of bank credit.

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