Question

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

Select one:
A. ability to hold the security to maturity
B. positive intent
C. the security must be a debt security
D. all of these.

Answer 1

d. all of these

Step-by-step explanation:

To classify a security as held-to-maturity, all of the following requirements must be met:

1. Ability to Hold the Security to Maturity: The holder of the security must have the intent and ability to hold it until its maturity date. This means that they do not have the intention to sell the security before it matures. Holding a security to maturity ensures that the investor will receive the full principal amount and any promised interest payments.

2. Positive Intent: The holder must have a positive intent to hold the security until maturity. This means that they should not have any plans or expectations of selling the security before its maturity date. It demonstrates the investor's commitment to the long-term nature of the investment.

3. The Security Must Be a Debt Security: Held-to-maturity classification applies specifically to debt securities. Debt securities are financial instruments that represent a creditor relationship between the issuer and the holder. Examples of debt securities include government bonds, corporate bonds, and mortgage-backed securities. Equity securities, such as stocks, are not eligible for held-to-maturity classification.

In conclusion, in order for a security to be classified as held-to-maturity, all three requirements must be met: ability to hold the security to maturity, positive intent, and the security must be a debt security.

Answer 2

A held-to-maturity security must meet three requirements: the ability to hold the security to maturity, positive intent, and the security must be a debt security.

Step-by-step explanation:

Option D, "all of these," is the correct answer. To be classified as held-to-maturity, a security must meet three requirements: the ability to hold the security to maturity, positive intent, and the security must be a debt security. Holding the security to maturity means that the investor intends to hold the security until it reaches its maturity date, rather than selling it before then. Positive intent means that the investor has the intention to hold the security until maturity, without any plans to sell it before then. Lastly, the security must be a debt security, which means it represents a loan made by the investor to the issuer of the security.