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E17-1_Identification of Investments




E17-1 For the following investments identify whether they are;1. Trading Securities;2. Available-for-Sale Securities;3. Held-to-Maturity Securities;Each case is independent of the other.;(a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next, month it will be sold.;(b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock.;(c) 10-year bonds were purchased this year. The bonds mature at the first of next year.;(d) Bond that will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and they may need to be sold.;(e) Preferred stock was purchased for its constant dividend. They company is planning to hold the preferred stock for a long time.;(f) A bond that matures in 10 years was purchased. The company is investing money set aside for an expansion project planned 10 years from now.


Paper#81148 | Written in 18-Jul-2015

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