Folger Company recognizes an unrealized holding gain for debt investments that are classified as AFS. If the company had classified the investments as trading securities, its total shareholders' equity would be

Answer: Share holders Equity = equity stock + Fair Value of Trading securities

Explanation:

Trading Securities are securities purchased by a business with the sole purpose of gaining profits, Trading Securities are purchased when the company speculates short term profits.

Trading Securities are recognized as current Assets in the statement of financial position. They are recognised at their Fair Value and they will be offset in the Shareholders equity as Proceeds from sale of short term investments.

Shareholders Equity will include the Fair Value (Balances) of Trading Assets. When Fair Value changes, The change in the Fair Value will be recognised in the income statement as Unrealized Gains on short term investments.