The government has approved the launch of Bharat Bond Exchange Traded Fund (ETF) in order to allow the investors to buy government debts. Which of the following statement is not true regarding Bharat Bond ETF (Dec 2019)?

Question

The government has approved the launch of Bharat Bond Exchange Traded Fund (ETF) in order to allow the investors to buy government debts. Which of the following statement is not true regarding Bharat Bond ETF (Dec 2019)?

It is India’s first corporate bond exchange traded fund
An Exchange-Traded Fund (ETF) is a basket of securities that trade on an exchange, just like a stock.
Each ETF will have a fixed maturity date and initially, they will be issued in two series, of 3 years and 5 years
The small unit size of the ETF is Rs.1,000
None of the above

LohaHridoy

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2025-01-04 04:42

1 Answers

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AhmedNazir · Accepted Answer · 2022-09-04T04:29:57+06:00

Option 3 : Each ETF will have a fixed maturity date and initially, they will be issued in two series, of 3 years and 5 years

The correct answer is option 3, i.e. Each ETF will have a fixed maturity date and initially, they will be issued in two series, of 3 years and 5 years.

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister of India, has approved the Government’s plan to create and launch India’s first corporate bond Exchange Traded Fund (ETF) — Bharat Bond ETF.
The Fund will provide additional sources of money for Central Public Sector Undertakings (CPSUs) Central Public Sector Enterprises (CPSEs), Central Public Financial Institutions (CPFIs) and other Government organizations to meet their borrowing requirements, apart from bank financing.
About ETF
- An Exchange-Traded Fund (ETF) is a basket of securities that trade on an exchange, just like a stock.
- ETF reflects the composition of an Index, like BSE Sensex.
- Its trading value is based on the Net Asset Value (NAV) of the underlying stocks (such as shares) that it represents.
- ETF share prices fluctuate all day as it is bought and sold.
- An ETF can own hundreds or thousands of stocks across various industries, or it could be isolated to one particular industry or sector.
- Bond ETFs are a type of ETFs which may include government bonds, corporate bonds, and state and local bonds—called municipal bonds.
Features of Bharat Bond ETF
- The ETF will comprise a basket of bonds issued by the CPSEs, CPSUs, CPFIs, and other government organizations.
- The unit size of the bond has been kept at just ₹1,000 so that even retail investors can invest.
- Each ETF will have a fixed maturity date and initially, they will be issued in two series, of 3 years and 10 years.
- Each series will have a separate index of the same maturity series.
- The index will be constructed by an independent index provider – National Stock Exchange.
About Bond
- A bond is an instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).