Chapter 10

Question 1

investor

Answer 1

is the owner of a bond or share of the stock

Question 2

investee

Answer 2

issues the bond or stock to the investor

Question 3

security

Answer 3

is a share or interest representing financial value
two types of securities:
debt
equity

Question 4

debt security

Answer 4

represents a credit relationship with another company or governmental entity that typically pays interest for a fixed period

Question 5

equity secuirity

Answer 5

represents stock ownership in another company that sometimes pays dividends

Question 6

trading investment

Answer 6

both debt and equity
securities in which the investor holds less than 20% of the investee’s voting stock (if an equity security) and that the investor plans to sell in the very near future

Question 7

held-to-maturity investment

Answer 7

debt

securities the investor intends to hold until they mature

Question 8

available-for-sale- investment

Answer 8

both debt and equity
securities in which the investor holds less than 20% of the investee’s voting stock (if an equity security) and that the investor does not plan to hold until they mature or sell in the near future

Question 9

significant interest investment

Answer 9

equity

securities in which an investor owns from 20% to 50% of the investee’s voting stock

Question 10

controlling interest investments

Answer 10

securities in which an investor owns more than 50% of the investee’s voting stock