Held-For-Trading Security

What is a 'Held-For-Trading Security'

A held-for-trading security refers to debt and equity investments that are purchased with the intent of selling them within a short period of time (usually less than one year). Accounting standards necessitate that companies classify any investments in debt or equity securities when they are purchased. The investments can be classified as: held to maturity, held for trading or available for sale. Held-for-trading securities (or simply trading securities) are considered short-term assets, and their accounting is handled as such. Gains and losses resulting from changes in the investment's value are recorded as gains and losses on an income statement.

BREAKING DOWN 'Held-For-Trading Security'

Held for trading securities include debt and equity instruments that are held for short periods of time, purchased with the intention of profiting from short-term price changes. They are purchased with the intention of selling them in the near term. These debt and equity investments are reported at fair value, and unrealized gains and/or losses are included in earnings.

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