I think I understand the difference but I am not sure
held for trading ----- securities that are plannning to be sold (but not mature?) in the short term. A profit is expected. I guess a short term bond held to its maturity (not sold) would be considered held to maturity?
available for sale -----crap securities that you just want to unload? seriously though, is the only destinction between held for trading and available for sale the likelihood that it will be a profitable sale?
The Sale of either of HFT (Held for Trading) or AFS (Available for Sale) securities has nothig to do with the maturity of the security. They are designations applied to the security, and held on the portfolio purely for the purposes of generating profits.
A Held to Maturity (HTM) security on the other hand, once so designated, should be kept on the books all the way to the maturity of the security. It would amortize - and SHOULD NOT BE SOLD.
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in either of the AFS or HFT security - any profit / loss made due to the trade / sale - makes its way to the income statement.
ok, very good… now I am more clear on what HTM is … that category can include short term debt instruments as long as they will _ not _ be sold.
still unclear on the difference between HFT and AFS. I need to know the difference because even though upon sale they are both treated the same… unrealized gains or losses are not ( AFS unrealized +/- goes in OCI)