Hi guys quick question : some of the exercises I see we say : if this equity was HTM … if it was AFS … if it was HFT.
in others I read that in any case HTM can only be debt security and HFT.
I end up a bit confused… is HTM only for debt security? for me HFT should basically be both as traders can very well deal with debt security too.
we could also hold equity longterm under HTM - theoretically - but of course it’s basically an evergreen investment unless the company goes bankrupt - or we’d want to sell, which we normally don’t.
would appreciate your replies.
Yes HTM is only for debt securities with a contractual maturity date. Equity cant be HTM because though you can keep it long term, it does’t really mature and run out.
You cannot apply amortizing cost measure on equity securities.
Also, remember that is always presumtion that each company is going concern (unless the liquidation is ahead). Thus equity does not have maturity. Maybe reasoning in this manner may help.
thanks for your feedback - just got confused with the exercises - perhaps they just took examples to make us see the difference but they used equities for HTM…