If the Fair Value of an Available-For-Sale Security Exceeds Its

question 150

True/False

If the fair value of an available-for-sale security exceeds its cost the security should be written up to fair value and a realized gain should be recognized.

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Definitions:

Risk Averse

A characteristic of preferring to avoid loss over making a gain, typically leading to more conservative decision-making in the face of uncertainty.

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.

Risk Loving

Condition of preferring a risky income to a certain income with the same expected value.

Risk Neutral

A condition or attitude where an individual is indifferent to risk when making economic decisions.