Question

A requirement for a security to be classified as held-to-maturity is?

1) ability to hold the security to maturity.
2) positive intent.
3) the security must be a debt security.
4) All of these are required.

Answer 1

The classification of held-to-maturity securities requires that the investor must have the ability and positive intent to hold the security, and the security in question must be a debt security. All these criteria must be met for a security to be classified as held-to-maturity.

Step-by-step explanation:

Requirements for a Security to be Classified as Held-to-Maturity

The classification of a security as held-to-maturity has specific requirements that must be met. These requirements are: 1) the ability to hold the security to maturity, 2) the positive intent, and 3) the security must be a debt security. All of these criteria are essential and they work together to determine the classification. A held-to-maturity security is one that the investor has the intent and ability to hold until the fixed maturity date. It is also characterized as a debt security, which is an obligation that allows the issuer to raise funds by promising to repay the lender according to terms of a contract.