Describe the criteria would use to classify ten-year bonds

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You are the controller for a corporation which owns several investments in debt securities, mainly in 10-year bonds. You know that each long-term investment must be classified as either a held-to-maturity or an available-for-sale security. This current year, market interest rates for similar bonds rose sharply, which caused the fair market value of the portfolio to decline substantially. You also know that the corporation does not intent to hold the 10-year bonds it currently owns to maturity. Additionally, each year you earn a bonus which is based on a percentage of net income.

Problem 1: Describe the criteria you would use to classify the 10-year bonds. Be sure to elaborate your response by explaining your reasoning. Also, assess whether or not the classification of these investments would affect your annual bonus in any way.

Reference no: EM132942438

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