Answered: Avallable-for-sale securities are…

Avallable-for-sale securities are securities that management expects to sell in the future, but not in the near term. © True O False

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Banks use to hedge against risk through options and futures contracts in order to:* A.…

A: Banks often enter into various contract wherein a lot of risk may be involved including but not…

Q: There are two risks involved in the bond investment. What are they and why are they risks?

A: Bonds are called fixed-income investments as they pay a fixed rate of interest to debtholders. They…

Q: Which of the following statements are correct concerning diversifiable, or unsystematic, risks? I.…

A: There are different type of risk that are available. Are associated with the investment made in the…

Q: statements are true of long-term investments? They can include bonds and stocks not intended to be…

A: Investment: It refers to the process of using the currently held excess cash to earn profitable…

Q: Thoroughly explain the concept of Bond Market Risk (Var). Compare the standard bond market risk…

A: Bond Market Risk, often referred to as Value at Risk (VaR) in the context of fixed-income…

Q: Derivatives are used both to hedge against risk and to acquire risk, both of which are geared…

A: Hedging is a risk management technique used in financial management in order to offset losses in…

Q: (2) A long position in a put option with an exercise price of $50 and a front-end pre- mium expense…

A: A.2) For Long Put option Pay off = Max of ({Strike Price - Share price}, 0) Net Profit = Pay off -…

Q: true or false

A: Public Offering A public offering is when the issuer of the company offers securities like bonds or…

Q: An investor has no specific right or guarantee of a return on their investment investing in…

A: When an investor purchases securities in stock market such as stocks or bonds, there is no specific…

Q: QUESTION 21 The risk inherent in the commercial real estate asset class has historically fallen in…

A: Real estate investment involves risk and return. The risk of investment in real estate can minimize…

Q: Identify and explain two traditional theories which seek to explain the term structure of interest…

A: Term structure of interest rate shows the interest rates for different period of time. One year…

Q: . Derivative securities are also called contingent claims because a. their owwners may hoose…

A: Derivative securities are securities whose payment completely depends on the value of other assets.…

Q: when is a good time to invest in straight bon

A: Bond are type of debt instruments that are used to raise the money from market and only interest is…

Q: 4) Primary Markets exist for securities such as ________ to be offered to potential investors for…

A: Primary market: Securities are created on the primary market, and investors trade those securities…

Q: What is the process that makes sure the market price of an underlying asset equals the price of a…

A: Futures contract is a derivative instrument in which the price of the underlying asset in fixed for…

Q: Hedgers can enter into an insurance policy, also known as a financia contract, also known as a…

A: There are mainly three types of derivative contracts. They are – futures, options and swaps.

Q: QUESTION 8 In the present value bond valuation model, risk is generally incorporated into the O…

A: The present value of a bond valuation model is a model to ascertain the current value of bond on the…

Q: Which one of the following is an example of mental accounting? Multiple Choice associating a…

A: The term "mental accounting" describes the various valuations that individuals assign to the same…

Q: rom the viewpoint of the investor, which of the following securities provides the least risk?…

A: Solution: Different type of securities exhibits different types of risk. The least risk is attached…

Q: With a best efforts underwriting, the investment banker O A. Does not receive a fee O B. Receives a…

A: Investment Banker - It is kind of middle man in the process of raising funds.

Q: For hedge accounting to be used, U.S. GAAP requires that these criteria must be satisfied, except: O…

A: The objective of hedge accounting is to match the timing of income statement recognition of the…

Q: What is a bond sinking fund investment? Question 12 options: An investment that is decreasing in…

A: A sinking fund investment is a type of investment, which is actually the money, or any portion of…

Q: Which of the following is NOT an investment an option stock bond cord

A: An option is an investment, in this buyer and seller interact and buying and selling of underlying…

Q: Target date mutual funds hold only debt instruments (e.g., bonds) with a maturity that matches the…

A: Mutual Funds are modern investment option where units and even fractional units of fund is traded…

Q: In regarding the Asset backed securities & Mortgage backed securities: 1- What is the utility using…

A: Asset-backed securities are financial instruments that are backed by income-producing assets such…

Q: Pass through securities alleviate risk from their balance sheets by O A. Keeping the mortgages on…

A: Securities are the financial instruments in the form of stocks, bonds, and other money market…

Q: residential mortgages and those backed by commercial mortgages

A: It’s easy to work out that if you’re applying for a mortgage for your business, you must be applying…

Q: The purpose of the Securities Act of 1933 is to regulate a security's investment price. True False

A: The companies raise money from investors by issuing securities. The company sometimes misrepresents…

Q: Plz solve !! Securities premium reserve can be used for writing of: A/ preliminary expenses B/ Fixed…

A: Securities premium amount is that amount which is received on issue of shares and this amount is…

Q: xplain how individual securities affect investment portfolio risk. In your answer, when discussing…

A: Portfolio risk - Portfolio risk refers to the possibility that the assets or units in your…

Q: Indicate the type of hedge each activity described below would represent. Activity 1. An options…

A: The objective of the question is to identify the type of hedge each activity represents. Hedging is…

Q: only To begin your savings plan it is a good idea to set aside your savings first and 8hly spend is…

A: Bonds- A bond is a fixed-income instrument that represents a loan made by an investor to a borrower…

Q: Adding insurance-linked securities to a portfolio can increase an investor's return without…

A: Insurance linked securities are financial instruments whose value is primarily based on insurance…

Q: Why is there a cost for retained earnings? Group of answer choices Earnings can be reinvested or…

A: Retained earnings is the amount of net income which remains after the distribution of dividends.

Q: Match the words with the term. Question 14 options: 12345 venture capital 12345…

A: 12345 venture capital risk…

Q: Discuss whether holding a callable bond will always be beneficial for the investors.

A: Callable bonds are debt instruments that gives the issuers to right to redeem the bond at a…

Q: According to the Capital Asset Pricing Model (CAPM), underpriced securities: A above the SML under…

A: CAPM is a capital asset pricing model and is used to find the required return on a stock. The…

Q: Investors invest in Fixed Income securities (i.e., bonds) for the passive income that comes from…

A: In this question, we are required to determine whether the given statement is true or false.

Q: 11. Suppose a firm wants to issue long-term debt securities. What are the legal processes that the…

A: Long-term debt securities Long-term debt securities are those securities that mature in more than…

Q: Use the following two choices to identify whether each intermediary or entity is a net buyer or net…

A: Financial securities are the financial instruments and financial assets in which funds are invested…

Q: A call option give (a) the right to sell the underlying security (b) the obligation to sell the…

A: A call option is an instrument which provides its holder an option to buy an underlying asset on a…

Q: Question 20 of 30: Securities backed by mortgage is the example of O Securitization O Take-out…

A: Mortgage-backed securities (MBS): These are type of investment which are asset-backed that is they…

Q: Question 4 Capital markets trade securities that: I. mature in more than one year. II. has…

A: Money market is a market where banks and financial institutions trade in short term instrument like…

Q: Identify and discuss the risks which affect the returns of the bond investor .Include relevent…

A: A bond is a debt security or fixed-income instrument issued by governments, municipalities,…

Q: DQuestion 17 Amacrohedge is a hedge of a partleular asset or lisbilltly D hedge of an entire balante…

A: Hedging is a strategy used to limit financial asset risks by offsetting positions in derivates that…

Question

Avallable-for-sale securities are securities that management expects to sell in the future, but not in the near term. © True O False

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A derivative security derives its value from another previously issued instrument (a stock or bond). True False
If securities x and y are below the security market line and securities k and l are above market line, which security would you buy? And why?
Describe how individual securities increase the risk of an investment portfolio. When it comes to risk and return, compare and contrast government securities, corporate debt securities, and shares/stocks in your response. Explain the notion of risk in further detail. What kind of risks should an investor (for example, a finance manager) be aware of while making investment decisions?
7
A security that is neither debt nor equity but derives its value from an underlying asset that is often another security is called a. convertible security b. hybrid security c. drivative security
A fair value hedge differs from a cash flow hedge because a fair value hedge Select one: a.records gains or losses in the value of the derivative directly to earnings of the company. b.defers the gains or losses in the value of the derivative using Other Comprehensive Income. c.cannot be used for firm purchase or sales commitments. d.is not recorded unless it is a highly-effective hedge.
How are derivatives valued on the balance sheet? How is the adjustment to fair value recorded differently for a cash flow hedge versus a fair value hedge? That is, how does the fair value adjustment of each type of hedge affect current period net income and the accounting equation? What are the three criteria that must be met for a derivative to be classified as a hedge? Once entities decide to buy or sell derivatives to hedge economic risks, they then need to decide whether they want to use hedge accounting; it is an election, not a requirement, even when the derivatives are for the economic purpose of hedging. This election is reminiscent of inventory accounting. Just like when a company selects an inventory method, a company is not required to select the accounting method (LIFO, FIFO, weighted average, specific unit) that most closely corresponds with the physical movement of inventory, although they are free to do so. If entities decide to elect hedge accounting, the following…
5. Changes in the fair value of the effective portion of a hedging financial instrument are recognized as a part of current earnings of the period for which of the following? Cash Flow Hedge Fair Value Hedge a. Yes Yes b. No Yes c. Yes No d. No No Multiple Choice a. b. c. d.
6. Which of the following types of investment carries the greatest risk? Stocks Bonds Mutual funds Certificates of deposit
In the context of financial derivatives, what is a futures contract? A) An agreement to exchange assets at a predetermined price and date. B) A contract that grants the holder the right, but not the obligation, to buy or sell an asset. C) A contract to buy or sell a specific quantity of an asset at a future date at a price specified today. D) A contract that provides regular interest payments and returns the principal at maturity.
Available-for-sale securities are securities that management expects to sell in the future, but not in the near term. True False
What causes a gain or loss on the sale of a bond investment? Group of answer choices when the selling company negotiates a better price when the selling price of the bond differs from the book value (cost) of the bond when the selling company has unamortized discounts when the selling company has unamortized premiums