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 However, this benefit has been withdrawn from the Assessment Year 2005-06.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
LKL PLC Project VZ (a) Cash Flow budget and NPV WORKINGS

What are the primary reasons that companies hold cash? Companies hold cash to do necessary payments to take advantage of opportunities as they arise and to cover unforeseen eme

Are there any ways to analyze and value seasonal businesses? Seasonal businesses can be valued by discounting flows using annual data, but this needs some adjustments. The righ

What is Sinking Fund A provision which requires the corporation to set aside a fixed amount every year to help provide for orderly repayment of the debt issue.

Z works for HS Company and has been asked to undertake an assessment of any health and safety issues that might be potential hazards in the department which she manages. Z's respon

State the term - Redemption Redemption is repayment of debt security at or before maturity.  Redemption could at par or at a premium to face value. A debt security will be rede

Q. What is Affiliated Company? Affiliated Company - Company or other organization related through common ownership,common control of management or owners or through some other

Why auditors need to attain audit evidence When significant fluctuations/unexpected relationshipsare identified which are inconsistent with  other  relevant  information  or  t

Characteristics of Warrants As mentioned earlier, a warrant is a variant of a call option and gives the holder a certain right to purchase shares of the company at a predetermi

Q. Explain the three kind’s non-financial incentives? Non-Financial incentives: Incentives which cannot be offered in terms of money are known as non-¬financial incentives. Ind