The 3 classifications are trading, held-to-maturity, or available-for-sale. Each classification has specific accounting requirements under U.S. GAAP that can affect an organization’s financial obligations and tax reporting. 1) Trading: These are actively managed for short-term profit. They are marked to market, meaning their value on financial statements reflects current market prices. Gains or losses due to price fluctuations are recognized immediately rather than waiting until they are sold. 2) Held-to-Maturity: These investments are intended to be held until they mature. They are recorded at amortized cost, not their current market value. This classification reflects a long-term investment strategy focused on earning interest over time rather than capitalizing on market price movements. 3) Available-for-Sale: This category includes debt investments that may be sold before maturity but are not actively traded. They are also marked to market, but unlike trading securities, unrealized gains or losses don’t directly affect net income until they are sold.