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 However, this benefit has been withdrawn from the Assessment Year 2005-06.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
364-Day T-Bills The Government considered that it is important to develop government securities market for monetary control. It also had an intention to ensure that government'

Your task is to prepare a presentation for a group of board members who are considering an investment of $100 million in your company. Your presentation will consist of three disti

Traditional   Capital Budgeting Techniques These techniques are usually very simple and easily catchable. But the fundamental drawback of these methods is that they don't cons

a) Sponsorship - refers to monetary gifts or donations in support of a business or an event venture in return for a dominant display of the sponsor's name. In this case, FC Barcelo

a recent business school graduate, you work directly for the corporate treasurer. Your corporation is going to issue a new security plan and is concerned with the probable flotatio

This is usually the third- or fourth-highest rating that a rating agency allocates to a security or insurance carrier. It is frequently the lowest investment-grade rating, but it i

that the business has far fewer linens than it needs, so he makes a major linen purchase on open account. Which of the following terms refers to the fact that partners Ma and Runni

what is the applicability of the operating cycle in a vegetaion farm in Uganda

What are the factors of debt securities A legal agreement, known as a trust deed, is drawn between security holders and company issuing the debt securities. Every security issu

Role of Government in the Financial Markets Many countries felt that the government should regulate certain aspects of the financial markets. Based on the history and culture o