Assume the Government of Canada issues new fixed-incomesecurities with an original term to maturity sixmonthsthat does not pay interest, which type of fixed-income securities were issued?
Treasury bills (T-bills) are short-term fixed-income securities issued by the Government of Canada with maturities of one year or less, including terms as short as six months or less. They do not pay interest in the conventional sense. Instead, they are sold at a discount to their facevalue, and investors receive the full face value upon maturity. The difference between the purchase price and the face value represents the investor's earnings.
A. Guaranteed bonds: These are long-term securities that pay periodic interest (coupons) and do not fit the short-term, non-interest-paying description of T-bills.
B. Commercial paper: Issued by corporations, not governments, and used to finance short-term liabilities.
D. Term deposits: These are bank products, not government securities, and typically pay interest over their term.
[Reference:CSC Volume 1, Chapter 6, "Government of Canada Securities – Treasury Bills" explains the characteristics of T-bills as short-term discount securities​., ]
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