CFA Practice Question

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CFA Practice Question

Fair value is used as the basis for valuation of a firm's investment securities when ______

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 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?
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