Question

Explain the difference between Treasury bills and commercial bills.

Answer 1

Treasury Bills:

1. A market for the purchase and sale of Treasury bills is known as a “Treasury bills Market”.
2. On the basis of periodicity Treasury bills may be (i) 91 days (ii) 182 days (iii) 364 days.
3. These bills are freely marketable and they can be bought and sold at any time.
4. A Treasury bill is nothing but a promissory note issued for a specific period stated therein.

Commercial bills:

1. A bill of exchange issued by a commercial organization is known as Commercial bills.
2. These bills are of 30 days, 60 days, and 90 days maturity.
3. It possesses the advantage of self-liquidating in nature.
4. To know the exact date of transactions, transparency of transactions, etc.