Video: Investment Categories

In this lesson, Nick Palazzolo, CPA, demystifies the different categories of investments, breaking them down into debt and equity options. He vividly describes how investing in bonds represents fixed income through interest payments, while equities allow investors to share in the profits and losses of a company. By elaborating on the nuances between trading, available-for-sale, and held-to-maturity securities, Nick clarifies the intentions and strategies behind each investment classification. His real-world experience as an auditor provides practical insights into how these categories appear on financial statements and the implications for users of those statements, particularly focusing on the fair value method and its application to debt securities.