« Creative destruction: another look at Japan's lost decade | Main | Fashion in Vogue, India »

Level 1, 2, 3: for sale on the market ?

For securities, this brings us to the three categories of investments; Levels 1, 2 and 3. Here's a guide:

Current Name; Level 1
Prior Name; Trading Securities
English Translation; We're selling now
Valuation (exit); Market value, probably on an exchange

Current Name; Level 2
Prior Name; Available for Sale
English Translation; We're selling if the price is right
Valuation; Market value, preferably on an exchange

Current Name; Level 3
Prior Name; Held to Maturity
English Translation; We're not selling
Valuation; Cost, unless the loss is "other than temporary".

Do you see a trend in valuations? It's ALL exit value. It's all based on intent. The reason we don't time value discount Level 1 and 2 securities is because the cash conversion is projected to happen now (or soon enough).

[ Via Calculated Risk ]


TrackBack URL for this entry:

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)