- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 3. Analyzing Balance Sheets
- Subject 3. Financial Instruments
CFA Practice Question
Fair value is used as the basis for valuation of a firm's investment securities when ______
B. the market value is less than the cost for each equity security in the portfolio.
C. the investment security is not classified as held-to-maturity.
A. management's intention is to dispose of the securities within one year.
B. the market value is less than the cost for each equity security in the portfolio.
C. the investment security is not classified as held-to-maturity.
Correct Answer: C
Investments in available-for-sale and trading securities are reported in a balance sheet at fair value.
User Contributed Comments 5
| User | Comment |
|---|---|
| danlan2 | For held-to-maturity, the amortized cost is used. |
| ostrich | An interesting question...to say the least..indeed!! |
| MFTIOA | would A be considered available-for-sale securities? I guess they can still be held-to-maturity securities that management intend to sell? |
| charliedba | A is not precisely accurate: these securities can still be held-to-maturity ones thus amortized cost should be used. |
| dybacis | What about Unlisted instruments that are not classified as held-to-maturity? |