Term
| Debt Securities (3 Characteristics) |
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Definition
1) A maturity value representing the amount to be repaid to the debt holder at maturity
2) An interest rate that specifies the periodic interest payments
3) A maturity date indicating when the debt obligation will be redeemed. |
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> represent ownership in a company
> carry voting right and right to dividends
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| Why are equity securities attractive? |
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Definition
| Because of their potential for significant increases in the price of securities |
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| Debt and equity securities purchased with the intent of selling them in the near future |
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| Available-for-sale securities |
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Definition
Equity securities that are not considered trading securities and are not accounted for using the equity method
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| arise when the fair value of a security changes, yet the security is still held by the investor. |
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| Held to maturity securities |
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| debt securities purchased by a company with the intnet and ability to hold those securities until they mature |
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| used for trading, available-for-sale, and held-to-maturity securities |
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| used if company has "significant influence" |
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| greater than or equal to 20% share of the company |
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| owning more than 50% of the company |
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| If you have "control of" the company |
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1) Remove historical cost from old category
2) Remove market adjustment from old category
3) Record in new category at fair value |
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