Investments in debt securities that the investor intends to hold for a short time and that are purchased in an attempt to profit from near-term price changes are classified as:

a. fair value securities.

b. available-for-sale securities.

c. trading securities.

d. adjusted historical cost securities.

Question

Business

Bridget Chaney

19 June, 12:06

Investments in debt securities that the investor intends to hold for a short time and that are purchased in an attempt to profit from near-term price changes are classified as:

a. fair value securities.

b. available-for-sale securities.

c. trading securities.

d. adjusted historical cost securities.

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Answers (1)

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Sanai Sellers · Answer 1

Answer: The answer is b. available-for-sale securities.

Explanation: Available-for-sale (AFS) securities are securities or equities held with the intent of selling them before their maturity dates in an attempt to make gains due to price changes. It is not all AFS securities that have maturity date, companies may also decide to keep them for a longer period till it is profitable for them to sell and make some gains.

Based on IFRS 9 Financial Instruments, financial assets are classified as either: (1) amortized cost, (2) fair value through profit or loss, (3) fair value through other comprehensive income. The AFS securities belong to the category of fair value through profit or loss.

Investments in debt securities that the investor intends to hold for a short time and that are purchased in an attempt to profit from near-term price changes are classified as:a. fair value securities.b. available-for-sale securities.c. trading securities.d. adjusted historical cost securities.