Answered: But why? for number 3

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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But why? for number 3

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Step 1

Held-to-Maturity (HTM) Securities

Held-to-maturity securities are those that companies purchase with the intention of keeping them until they mature. They differ from trading securities or securities that are open for sale in that firms typically do not keep onto securities until they mature. Employed to diversify investment portfolios, protect against interest rate volatility, and produce a small, low-risk capital gain over a longer period of time, held to maturity securities are typically used by businesses. Debt instruments like corporate or government bonds make up the majority of the investments.

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