i have a doubt on q.4 . can somebody please elaborate.
statement 2 : It is carried out to bring down long term interest rate by selling the security maturing in the long term which in turn bring down the interest rate in that period.
statement 3 : RBI has sold securities maturing in the short term and bought securities maturing in the long term.
so, which is it, long term securities were sold or short term?
Statement 2 is wrong in their explanation.
Buy long term sec–> Prices of sec goes up–> Yield/interest rate comes down–> encourages investment in long gestation projects
Can you please elaborate more on buying and selling of short term and long term securities through Operation Twist?
i have a doubt on q.4 . can somebody please elaborate.
statement 2 : It is carried out to bring down long term interest rate by selling the security maturing in the long term which in turn bring down the interest rate in that period.
statement 3 : RBI has sold securities maturing in the short term and bought securities maturing in the long term.
so, which is it, long term securities were sold or short term?
Hi Abhijeet… Securities maturing in short-term were sold.
Statement 2 is wrong in their explanation.
Buy long term sec–> Prices of sec goes up–> Yield/interest rate comes down–> encourages investment in long gestation projects
You are right Ishita. There was a mistake in the explanation of the statement 2. It has been corrected now.