Which statement is correct?
A)A held for trading security can be classified as cash.
B)A held to maturity security can be classified as cash.
C)A held for trading security can be classified as cash equivalent
D)A held for trading security can be classified as cash equivalent.

Question

Quizplus · Accepted Answer

A held for trading security is a short-term investment that is bought and held primarily for the purpose of selling it in the near term to generate profits on short-term price changes. Cash equivalents, on the other hand, are highly liquid short-term investments that are readily convertible to cash and have a low risk of value fluctuation. Therefore, a held for trading security can be classified as cash equivalent, but not as cash. A held to maturity security is a long-term investment that is held until maturity and cannot be classified as either cash or cash equivalent.

Which Statement Is Correct