- CFA Exams
- CFA Level I Exam
- Study Session 5. Financial Reporting and Analysis (1)
- Reading 13. Intercorporate Investments
- Subject 2. Investments in Financial Assets
CFA Practice Question
Which of the following investments in debt securities would not normally be classified as long-term?
A. Available-for-sale securities.
B. Trading securities.
C. Held-to-maturity securities.
Explanation: Only held-to-maturity and available-for-sale securities are potential non-current investments. Trading securities are always considered to be current in nature, whereas held-to-maturity and available-for-sale securities may be classified as long-term should their maturity, or management's intent dictate.
User Contributed Comments 1
| User | Comment |
|---|---|
| coolpuneet | Classification of debt securities is not determined based on management's intent of trading or holding them till maturity. Classification between LT/ST depends on the maurity of the secrity. A bnd maturing in 10 years held for trading purpose is a ST security. The question here seems vague since "normally" depends on the type of institution. There is a big difference betweeen a hedge fund vs bank balance sheet especially when it comes to fixed income arbitrage funds. However the trading securities would be classified as short term in either case. |