Zero risk: Government securities are free from any risk as there are no chances of default and government assures payment of principal along with interest.
interest is paid regularly: in government bonds interest is paid at regular intervals generally half yearly or quarterly.
Liquidity: government securities can be bought and sold regularly and can be instantly converted into cash.
Tax exemptions: there is tax relief on the interest earned on government securities.
Assured interest for long period of time.
DEMERITS OF GOVERNMENT SECURITIES:
If interest rate rises in the future investor may lose: if market rates of interest rises in the future, th investor will have to suffer losses as his money is blocke in a fixed rate government security.
Rate of return is lowwer: we aready discussed that rate of return in