Which of the following is the best description of investments in trading securities?
A)Investments in bonds that management intends to hold to maturity.
B)Investments in bonds that are held primarily for the purpose of selling them in the near future.
C)Investments in more than fifty percent of the voting stock of another company.
D)Investments that provide the investor significant influence over the investee,but not control over the investee.

Question

Quizplus · Accepted Answer

Investments in trading securities are securities that are bought and held primarily for the purpose of selling them in the near future to generate profits from short-term price fluctuations. They are not intended to be held until maturity like investments in bonds under choice A. Choice C describes investments in the majority voting stock of another company, which is an example of a controlling interest, not trading securities. Choice D describes investments in securities that provide significant influence over the investee, which is an example of an equity method investment, not trading securities.

Which of the Following Is the Best Description of Investments