Government securities are debt instruments issued by governments to finance government spending and control money supply. They include treasury bills (short term), notes, and bonds (long term). Government securities are considered low risk investments because they are backed by tax revenue. They offer safety of principal, liquidity, and can be used as collateral for loans. However, they also carry interest rate risk and may not be suitable for long term holding.

4.  A government security is a bond or other type of debt
obligation that is issued by a government with a
promise of repayment upon the security's maturity date.
 Government securities are usually considered low-risk
investments because they are backed by the taxing
power of a government.
 Bonds, notes, and other debt instruments sold by
a government to finance its borrowings. These are
generally long-term securities with the
highest market ratings.

5.  Government securities are the securities issued by
the government for raising a public loan.
 A Government security is a tradable instrument
issued by the Central Government or the State
Governments. It acknowledges the Government’s
debt obligation. Such securities are short term
(usually called treasury bills, with original
maturities of less than one year) or long term
(usually called Government bonds or dated
securities with original maturity of one year or
more). In India, the Central Government issues
both, treasury bills and bonds or dated securities
while the State Governments issue only bonds or
dated securities, which are called the State
Development Loans (SDLs).

6.  Government securities carry practically no risk of
default and, hence, are called risk-free gilt-edged
instruments. Government of India also issues savings
instruments (Savings Bonds, National Saving
Certificates (NSCs), etc.) or special securities (oil
bonds, Food Corporation of India bonds, fertiliser
bonds, power bonds, etc.). They are, usually not fully
tradable and are, therefore, not eligible to be SLR
securities.

12.  Government securities are usually issued for two different
reasons. The primary reason that most government securities
are issued is to raise funds for government expenditures. The
federal government issues treasury securities to cover
shortfalls (deficits) in its annual budget. Additionally, cities
will often issue bonds for construction of schools, libraries,
stadiums, and other public infrastructure programs.
 A central bank of a country, such as the U.S. Federal
Reserve, will sell debt securities for another reason: to
control the supply of money in an economy. If the Federal
Reserve wants to slow the growth rate of money in the
economy, it will sell government securities. This means that
it is sucking up dollars from the economy and replacing them
with government securities, which results in a slowing of the
rate of growth in the money supply. Slowing the rate of
money's growth in an economy will help keep inflation under
control.

13.  It offers maximum safety.
 It can be held in book entry.
 It can also be used as Collateral.
 It can be sold easily.
 Delivery v/s payment system.

14.  Interest rate risk.
 Not liquid.
 Mostly ideal for short term investment.

15.  Dated Government securities:
Dated Government securities are long term securities
and carry a fixed or floating coupon (interest rate) which
is paid on the face value, payable at fixed time periods
(usually half-yearly).
 They are issued at face value. Coupon or interest rate is
fixed at the time of issuance, and remains constant till
redemption of the security.The tenor of the security is
also fixed. Interest /Coupon payment is made on a half
yearly basis on its face value.The security is redeemed at
par (face value) on its maturity date.

16.  A written and signed promise to pay a
certain sum of money on a certain date, or
on fulfillment of a specified condition. All
documented contracts and loan agreements are bonds.
 Construction: A three-party contract
(variously called bid bond, performance bond, or surety
bond) in which one party (the surety, usually
a bank or insurance company) gives a guaranty to
a contractor's customer (obligee) that the contractor
(obligor) will fulfill all the conditions of the contract
entered into with the obligee. If the obligor fails to
perform according to the terms of the contract, the
surety pays a sum (agreed upon in the contract and
called liquidated damages) to the customer as
compensation.

17.  TREASURY BILLS : Short term securities issued by
federal government.
 A short-term debt obligation backed by the U.S.
government with a maturity of less than one year. T-bills
are sold in denominations of $1,000 up to a maximum
purchase of $5 million and commonly
have maturities of one month (four weeks), three
months (13 weeks) or six months (26 weeks).
 Treasury Bill are issued through a competitive bidding
process at a discount from par, which means that rather
than paying fixed interest payments like conventional
bonds, the appreciation of the bond provides the return
to the holder.
 TREASURY NOTES: Government securities with
maturity periods longer than Treasury Bill.
 Treasury bonds: Long term investments with a maturity
period of 30 years.

18.  Zero Coupon bonds :
Zero Coupon bonds are bonds issued at discount to
face value and redeemed at par. These were issued
first on January 19, 1994 and were followed by two
subsequent issues in 1994-95 and 1995-96
respectively. The key features of these securities are:
 They are issued at a discount to the face value. The
tenor of the security is fixed.The securities do not
carry any coupon or interest rate. The difference
between the issue price (discounted price) and face
value is the return on this security.The security is
redeemed at par (face value) on its maturity date.

19.  Partly Paid Stock :
Partly Paid Stock is stock where payment of principal
amount is made in installments over a given time frame.
It meets the needs of investors with regular flow of funds
and the need of Government when it does not need funds
immediately. The first issue of such stock of eight year
maturity was made on November 15, 1994 for Rs. 2000
crore. Such stocks have been issued a few more times
thereafter. The key features of these securities are:
 They are issued at face value, but this amount is paid in
installments over a specified period. Coupon or interest
rate is fixed at the time of issuance, and remains constant
till redemption of the security. The tenor of the security is
also fixed. Interest /Coupon payment is made on a half
yearly basis on its face value.The security is redeemed at
par (face value) on its maturity date.