Match each of the definitions that follow with the appropriate investment term (a-j).
-Preferred and common stocks that represent ownership in a company and do not have a fixed maturity date
A)Debt securities
B)Equity securities
C)Investor
D)Investee
E)Cost method
F)Trading securities
G)Available-for-sale securities
H)Held-to-maturity securities
I)Equity method
J)Business combination

Question

Quizplus · Accepted Answer

Preferred and common stocks do not have a fixed maturity date and represent ownership in a company, making them equity securities.

Answer: A
 Debt securities have a fixed maturity date and represent a loan made by an investor to an investee.

Answer: C
 An investor is a person or entity who makes an investment in a security or asset.

Answer: D
 An investee is a person or entity who receives an investment in a security or asset.

Answer: E
 The cost method is a way of accounting for investments in which the investor records the investment at its original cost.

Answer: F
 Trading securities are investments that are bought and held for the purpose of selling them in the near future for a profit.

Answer: G
 Available-for-sale securities are investments that are not held for trading purposes but can be sold if necessary, and are recorded at fair value.

Answer: H
 Held-to-maturity securities are investments that are held until their maturity date, and are recorded at their amortized cost.

Answer: I
 The equity method is a way of accounting for investments in which the investor records its share of the investee's profits and losses on its income statement.

Answer: J
 Business combination refers to a merger or acquisition in which one company acquires another company, often through the purchase of its stock or assets.

Match Each of the Definitions That Follow with the Appropriate