Hold to Maturity

Schweser says that take Hold to Maturity items on balance sheet at Historical Cost but John Harris notes says take at Amortized cost. What do you think guys? I have to check CFAI text. I have already sent an email to John and will update you as soon as I hear back from him.

Hmmmm, my Schweser study notes (2008 version, of course) says amortized cost.

There is no difference between historical cost and amortized cost.

Arent Hold to Maturity items necessarily debt, and as such are carried at their amortized cost? (which is the historical cost)

but one of the question had both the options (Historical and Amortized cost).

secret sauce says that held-to-maturity debt is carried on the balance sheet at historical cost.

The CFAI text mentions historical cost. I would go with that.

I think the only reason some sources say amortized cost is to be more precise and account for possible premium or discount amortization. Assuming the debt sells at par, historical cost is accurate.

I second Super I’s explanation.

Having worked as a fixed income PM for the past fifteen years, I will tell you that often we just refer to something as at “cost” and don’t even bother saying “amortized” or “historical” – though we mean amortized cost. I don’t like equating amortized cost to historical cost even if the CFAI text does this sometimes. My guess is that any question that exploited (even inadvertently) such ambiguity would be screened out by the people who are supposed to review such things. If you bought a ten year bond five years ago at a dollar price of 99, virtually all fixed income professionals I know would say your “historical” cost is 99 and your amortized cost is 99.5.