Held to maturity securities
Held to maturity securities are held by until they mature. The investors buy such securities with intention to keep them so long. Usually the corporation invest in that way, because this type of security is reported as amortization on the financial statements.
If the security is kept until it matures, the temporary price (as in case of securities held for trading) is not important. Only the interest income is shown in income statement.
Are held to maturity securities profitable?
Held to maturity securities have predetermined return which is not dependent on market changes. They are associated with low risk level. As the date and sum of return is known, it is easier to create financial plans. However, it is very difficult to sell them before the date and the return isn't very high (low risk, low profit). The investor should calculate which type of securities is more profitable for him.
- Najeeb, S. F., Bacha, O., & Masih, M. (2017). Does a held-to-maturity strategy impede effective portfolio diversification for Islamic bond (sukuk) portfolios? A multi-scale continuous wavelet correlation analysis. Emerging Markets Finance and Trade, 53(10), 2377-2393.
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