Module: | Primary Categories & SPPI Rules
Q1: Which of the following statements regarding the primary categories of investment classification for banks are correct?
1. The entire investment portfolio must be classified into three primary categories: Held to Maturity (HTM), Available for Sale (AFS), and Fair Value through Profit and Loss (FVTPL).
2. Held for Trading (HFT) is a distinct fourth primary category separate from FVTPL.
3. Held for Trading (HFT) is a sub-category within the Fair Value through Profit and Loss (FVTPL) category.
4. Subsidiaries, joint ventures, and associates are included in the investment portfolio for these classification norms.
2. Held for Trading (HFT) is a distinct fourth primary category separate from FVTPL.
3. Held for Trading (HFT) is a sub-category within the Fair Value through Profit and Loss (FVTPL) category.
4. Subsidiaries, joint ventures, and associates are included in the investment portfolio for these classification norms.
✅ Correct Answer: B
Banks must classify their investments into three primary categories: HTM, AFS, and FVTPL. 'Held for Trading' (HFT) is explicitly defined as a sub-category within FVTPL, not a separate primary category.
Furthermore, investments in subsidiaries, joint ventures, and associates are excluded from this specific framework of Investment Classification MCQs.
Furthermore, investments in subsidiaries, joint ventures, and associates are excluded from this specific framework of Investment Classification MCQs.