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Question
Distinguish between funded and unfunded debt.
Distinguish Between
Solution
| Funded debts | Unfunded debt | ||
| (i) | Funded debts are for long term periods, and their payment is made after a year. | (i) | Unfunded debt is for a short period say less than a year. |
| (ii) | The government creates a debt fund in order to repay this debt. | (ii) | Government does not create any separate fund to repay this debt. |
| (iii) | In this, on the maturity of fund the debt is repaid. | (iii) | Treasury Bills are paid off within a year. So, it comes as an example under unfunded debt. |
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