New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    Corporate bonds would be included in the

    held-to-maturity (HTM) portfolio that would make these securities more attractive for investors.What is the primary purpose of businesses holding Held-to-Maturity (HTM) securities?
    A To actively trade and generate short-term profits Correct Answer Incorrect Answer
    B To insulate from interest rate volatility Correct Answer Incorrect Answer
    C To maximize capital gains in the short term Correct Answer Incorrect Answer
    D To diversify their investment portfolios Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Securities that are bought by businesses with the intent to hold them until maturity are known as Held-to-Maturity (HTM) securities. They differ from trading securities or securities open for sale as they are not held until maturity. Companies mainly employ HTM securities to diversify their investment portfolios, insulate from interest rate Volatility, and create a modest, low-risk Capital Gain for a longer period. Debt instruments such as corporate or government Bonds typically make up the investments. 

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