Public Securities

What are Public Securities?

Public securities, also known as marketable securities, are debt or equity securities that are openly or easily traded in a market. In a previous article, the classification of such investment methods was further discussed.

The securities are either equity or debt-based. An equity security is an investment based on the equity of a company. A debt security is an investment based on the debt of a company or entity.

Public Securities

The investor must have little or no influence over the investee to classify an investment as a public or marketable security. In other words, the company or person purchasing these investments must have no controlling interest in the company they are investing in. If control or influence does exist, then the investment may be classified as a private investment rather than as a marketable security.

How are These Investments Treated in Accounting?

In general, these investments can be classified in an investor’s accounting as either held-to-maturity (HTM), available-for-sale (AFS), or held-for-trading (HFT). The accounting classification is selected by the investor, but should also be dictated by their history of investments.

Each of these three types has classification criteria as outlined below:

Held-to-maturity (HTM)

  • Only for debt investments
  • Ability and intent of investor to hold until maturity
  • Most likely held as a non-current asset
  • Interest received is shown on the income statement

Available-for-sale (AFS)

  • Either equity or debt investment
  • Neither held-for-trading nor held-to-maturity
  • Often classified as an asset, either current or non-current
  • Profit or loss on sale is displayed as a realized gain/loss that affects net income
  • Interest or dividends received are shown on the income statement

Held-for-trading (HFT)

  • Either equity or debt investment
  • Investor buys and sells frequently
  • Most likely classified as a current asset
  • Profit and loss affects the income statement
  • Profit or loss on sale is displayed as a realized gain/loss that affects net income
  • Interest or dividends received are shown on the income statement
Before starting to trade, never invest too much money in one trade and always follow the rules of risk management. Focus on long-term profits instead of short-term trading. To make the right decisions, always follow financial news and events. It is necessary to create a clear trading plan and strategy and stick to it. Use technical analysis tools to support decision making. Focus on the difference between return and risk instead of just focusing on profit. Avoid emotional pressure when trading and stay relaxed and patient. In addition, learn and constantly improve your skills and knowledge of Forex trading to achieve success in the field. The above notes will help you get the best results when participating in forex trading and ensure that you minimize your risks and maximize your profits.