Unrealized holding gains and losses on debt securities affect net income when the securities are classified as $\begin{array}{llll}& \text{ Trading}& \text{ Available-for-Sale}& \text{ Held-to-Maturity}\\ \text{ I. }& \text{ Yes }& \text{ No }& \text{ No }\\ \text{ II. }& \text{ Yes }& \text{ Yes }& \text{ No }\\ \text{ III. }& \text{ No }& \text{ Yes }& \text{ Yes }\\ \text{ IV }& \text{ No }& \text{ No }& \text{ Yes }\end{array}$


A) I
B) II
C) III
D) IV

Unrealized Holding

Gains or losses on investments that have not yet been sold and so are not yet reflected in the income statement.

Debt Securities

Financial instruments representing money borrowed that must be repaid, which include bonds, notes, and bills.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenue, a key indicator of financial health.