Securities Bought and Held Primarily for Sale in the near Term

question 146

Multiple Choice

Securities bought and held primarily for sale in the near term to generate income on short-term price differences are

• A) trading securities.
• B) available-for-sale securities.
• C) never-sell securities.
• D) held-to-maturity securities.

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Definitions:

Basis Risk

The risk that the price of a hedge and the asset being hedged will not move in perfect correlation.

Call Option

A financial arrangement granting the buyer the freedom, but not the duty, to acquire an asset such as a stock, bond, commodity, at a set price within an established timeframe.

Credit Default Swap

A financial derivative that allows an investor to swap or offset credit risk with another party.