Government must classify investments into one of three categories of input to establish fair value.
A government holds the following investments. For each, indicate the category in which it should most likely be classified.
1. A 20 year, 4 percent corporate bond rated AA by a leading rating agency. The bond is not widely traded in a market.
2. Shares in a privately held high-tech "start-up" company.
3. Shares in a corporation listed on the New York Stock exchange.
4. Interest rate swaps with a major bank as the counterparty.