There are five different classifications of securities for us to invest in. They are called
Trading, Available-For-Sale, Held-to-Maturity, Significant Influence, and Control. First,
let’s define what each type really is. (Wild, Larson, Chiappetta 2015)
Available-For-Sale Securities is an investment where the intent is to sell them in the short
term to earn a profit.
Trading Securities are debt and equity Securities that the company, us, intends to actively
manage and trade for profit.
Held-to-Maturity securities are debt or equity securities purchased with the intention of
holding the investment to maturity.
Significant Influence security is a long term investment where the investor can exert
significant influence over the investee, IE has more of a say in decisions the company
makes compared to other shareholders who own less voting stock.
Control security is a long term investment where the investor owns more than 50% of the
company and can basically make decisions for the company, domination all other
shareholders.
Trading Securities and Available-for-Sale Securities are both subject to fair value, and
therefore run more of a risk when it comes to their value, as it changes over time, leading
to a higher chance of having a loss on the investment.
If you want more of a say in how the company you are investing in does, than Significant
influence, where you own 20% or more of the stocks, or Controlling Influence where you
