Abala Corporation purchased $50,000 worth of ABC Company stock.The corporation believes that the stock price will double within a few months and plans to sell the stock as soon as its target price is reached.This investment is characterized as ________ securities.

Question

Quizplus · Accepted Answer

The investment in ABC Company stock is characterized as trading securities because Abala Corporation intends to sell the stock as soon as its target price is reached. Trading securities are securities that are bought and held primarily for the purpose of selling them in the near term to generate profits on short-term price differences. Held-to-maturity securities are bought by companies with the intention of holding them until they mature. Discretionary securities refer to securities managed by a discretionary investment manager. Available-for-sale securities refer to securities held by a company that may be sold in the future but are not held for the purpose of short-term profit generation.

Abala Corporation Purchased $50,000 Worth of ABC Company Stock