Module: | SLR, REITs & FVTPL Mandates
Q10: Which of the following statements regarding the Held for Trading (HFT) sub-category are correct?
1. Instruments in HFT must be fair valued on a daily basis.
2. Instruments can be included in HFT even if there is a legal impediment against selling them.
3. Purposes for HFT include short-term resale, locking in arbitrage profits, and hedging related risks.
4. Any valuation change in HFT instruments must be recognized in the Profit and Loss Account.
2. Instruments can be included in HFT even if there is a legal impediment against selling them.
3. Purposes for HFT include short-term resale, locking in arbitrage profits, and hedging related risks.
4. Any valuation change in HFT instruments must be recognized in the Profit and Loss Account.
✅ Correct Answer: B
Statements 1, 3, and 4 are correct.
HFT instruments require daily fair valuation and P&L recognition.
Qualifying purposes include short-term resale and arbitrage.
Statement 2 is incorrect because a bank shall only include instruments in HFT when there is no legal impediment against selling or fully hedging them, as noted in Investment Classification MCQs.
HFT instruments require daily fair valuation and P&L recognition.
Qualifying purposes include short-term resale and arbitrage.
Statement 2 is incorrect because a bank shall only include instruments in HFT when there is no legal impediment against selling or fully hedging them, as noted in Investment Classification MCQs.