Categories of securities

For purposes of valuation and reporting at a financial statement date, companies classify debt and stock investments into three categories:

  1. Trading securities are bought and held primarily for sale in the near term to generate income on short-term price differences.
  2. Available-for-sale securities are held with intent of selling them sometime in the future.
  3. Held-to-maturity securities are debt securities that the investor has the intent and ability to hold to maturity.
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