CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Concerning changes to the classification of its investment portfolio from held-to-maturity to available-for-sale (under U.S. GAAP):

A. Companies cannot change the classification once it is selection.
B. The securities must be marked to market on the date of transfer.
C. Securities continue to be reported at cost as they were previously.
Correct Answer: B

Under U.S. GAAP, companies can change investment classifications. When this occurs, the securities transferred must be marked to market on the date of transfer. This hinders their ability to manage profits via classification change.

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