Question

Assume Intervale Railway is considering investing in Pale Co. stock for three months. The investment will represent 5% of the voting stock of Pale Co. How would the investment be classified?a. Significant interest investmentb. Trading investmentc. Held-to-maturity investmentd. Controlling interest investment

Answer 1

Option b (trading investment) is the correct choice.

Step-by-step explanation:

• Usually, the word 'trade investment' becomes interpreted as another expenditure undertaken by a corporation in certain company's securities or debentures towards supporting the initial company's transaction either business.
• Trading securities involve commodities or assets which are already intended by the administrators to start buying to generate money initially.