Q.A short-term instrument issued by the Government of India at a discount to its face value, redeemed at full face value on maturity, and regarded as carrying virtually no default risk, is a:
(A) Certificate of Deposit
(B) Commercial Paper
(C) Treasury Bill
(D) Debenture

Government-issued, discount-priced, sovereign-guaranteed, and maturing within a year describes a Treasury Bill specifically.

Check who issues each instrument — only one of the four is issued by the government itself.

A Treasury Bill (T-Bill) is issued by the Government of India (through the RBI), at a discount to face value and redeemed at full face value on maturity, for standard maturities of 91, 182 or 364 days. Because it carries a sovereign guarantee, it is regarded as the safest money-market instrument.

Option-by-option analysis:

• (A) Incorrect — a Certificate of Deposit is issued by a bank/financial institution, not the government.
• (B) Incorrect — Commercial Paper is issued by large, highly rated companies, not the government.
• (C) Correct — this precisely describes a Treasury Bill.
• (D) Incorrect — a Debenture is a long-term capital-market instrument issued by a company, not a short-term, government-issued money-market instrument.