A
The minimum interest rate demanded by foreign institutional investors.
B
The maximum yield accepted by the RBI at a G-Sec auction, determining the coupon or price of the security.
C
The penalty rate charged by the RBI on Primary Dealers for failing to bid.
D
The average yield of government bonds in the secondary market over a financial year.
Correct answer: (b) The maximum yield accepted by the RBI at a G-Sec auction, determining the coupon or price of the security.
Explanation
Option B is correct because the cut-off yield is defined as the maximum yield accepted by the RBI at a G-Sec auction, which determines the security's coupon or price. The other options misstate the economic definition of the term.
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.