UPSC Prelims 2024 · GS Paper I
Question 43: Economy and Social Development
In India, which of the following can trade in Corporate Bonds and Government Securities ?
- 1.Insurance Companies
- 2.Pension Funds
- 3.Retail Investors
Select the correct answer using the code given below :
AnswerUPSC’s answer is (d).
Insurance companies and pension funds are large institutional players in both corporate bonds and government securities. Retail investors can also trade: they can buy and sell G-secs directly through the RBI Retail Direct platform and can trade listed corporate bonds through stock exchanges and brokers. So all three categories can trade in both. Remember: G-secs are no longer for institutions alone.
- 1. Insurance companies are major investors in G-secs and corporate bonds.
- 2. Pension funds invest in both G-secs and corporate bonds.
- 3. Retail investors can trade G-secs via RBI Retail Direct and corporate bonds via exchanges.
How you could have got this
- If you were sure statement 1 is correct, (b) goes: it leaves 1 out.
What you needed to know: Insurance companies are major investors in G-secs and corporate bonds.
- Then, if you were sure statement 2 is correct, (c) goes: it leaves 2 out.
What you needed to know: Pension funds invest in both G-secs and corporate bonds.
- Then, if you were sure statement 3 is correct, (a) goes: it leaves 3 out.
What you needed to know: Retail investors can trade G-secs via RBI Retail Direct and corporate bonds via exchanges.
Only (d) is left. This one needs every statement.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Wrong: it leaves out retail investors, who can also trade.
- (b) Wrong: it leaves out insurance companies, who are major investors.
- (c) Wrong: it leaves out pension funds, who also invest.
- (d) Right: insurers, pension funds and retail investors can all trade.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2024, General Studies Paper I, Series A. The paper on upsc.gov.in.