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Question
Which of the following statements is incorrect regarding Financial Markets?
Options
The process by which allocation of funds is done is called financial intermediation.
Money market instruments are close substitutes for money.
The difference between the price at which the treasury bills are issued and their redemption value is the interest receivable on them and is maturity value.
Treasury Bills are issued at a price which is lower than their face value and repaid at par.
Solution
The difference between the price at which the treasury bills are issued and their redemption value is the interest receivable on them and is maturity value.
Explanation -
The interest receivable on treasury bills is the difference between the price at which they are issued and their redeeming value, and is referred to as discount.
