Advantages and disadvantages of investing in gilts, Financial Management

Advantages and Disadvantages of Investing in Gilts

Advantages

As the security is issued by the GOI, it has a minimal default risk.

Investors have the opportunity to invest in very long-term debt sometimes up to 20 years because of the long maturity periods.

Almost all issues by the government have adequate liquidity except for a few. With the primary dealer authorized to deal in the buying and selling, he can take care of the liquidity.

 

Tax benefits

Tax benefits under Section 80L upto Rs.3,000 are available with no TDS (tax deducted at source). However, this benefit has been withdrawn from the Assessment Year 2005-06.

Disadvantages

The inflation will decrease the real return on the security and the possibilities of higher interest rates erode the value of the bond.

 

Posted Date: 9/10/2012 7:35:51 AM | Location : United States







Related Discussions:- Advantages and disadvantages of investing in gilts, Assignment Help, Ask Question on Advantages and disadvantages of investing in gilts, Get Answer, Expert's Help, Advantages and disadvantages of investing in gilts Discussions

Write discussion on Advantages and disadvantages of investing in gilts
Your posts are moderated
Related Questions
Why do we focus on cash flows in place of profits when evaluating proposed capital budgeting projects? We focus on cash flows in place of profits while evaluating proposed capita

A bank comprises a $500 million portfolio of investments and bank credits. The everyday standard deviation of return on this portfolio is .666 %. Capital adequacy standards need th

Q. Board of Directors Board of Directors - Individuals responsible for overseeing the affairs of an entity including the election of its officers. Board of a CORPORATION which

Commercial Paper (CP) is a short-term unsecured promissory note issued in the open market. It also represents the obligation of the issuer. Normally, it is issued

What does an investment banker do when underwriting a new security issue for a corporation?  When underwriting a new security concern an investment banker buys it and then rese

To evaluate a company using enterprise discounted cash flow (DCF), we discount free cash flow by the weighted average cost of capital (WACC). The weighted average cost of capital r

Q. Define the Constructive Receipt? Constructive Receipt - A taxpayer is considered to have received income even though monies are not in hand, it may have been set aside or ot

Assume that you can receive $25,000 per year forever and that your cost of money is 7%.  What is this opportunity worth today?

This is an individual assignment.  You are employed as a Trainee Accountant by Finners Accountants Ltd. The Finance Manager, Mr B Proudfoot has asked you to review details from

Enumerate the Securities and Investment Analysis Purchase of bonds, stocks and othersecurities involve analysis and techniques which are highly specialized. An investorshoul