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Accounting Classification and Fair Value Levels

AFS financial assets, control securities, noncovered securities, and Level 1, 2, and 3 asset classifications.

Accounting Classification and Fair Value Levels terms help classify the securities, issuers, vehicles, rights, liquidity profiles, and accounting labels that define an investable universe.

Use this branch when the investable set, ownership right, fair-value input, cash-equivalent status, issuer signal, or cross-border vehicle affects portfolio selection.

Key Terms in This Branch

TermUse it for
Available-for-Sale (AFS) Financial AssetsA security, right, liquidity, valuation, or market-universe term used to classify eligible investments.
Control SecuritiesA term page that narrows this branch to a specific investing concept, evidence source, or decision point.
Level 1 AssetsA security, right, liquidity, valuation, or market-universe term used to classify eligible investments.
Level 2 AssetsA security, right, liquidity, valuation, or market-universe term used to classify eligible investments.
Level 3 AssetsA security, right, liquidity, valuation, or market-universe term used to classify eligible investments.
Noncovered SecurityA security, right, liquidity, valuation, or market-universe term used to classify eligible investments.

What to Check

Check the security type, issuer, listing or trading venue, liquidity, rights, transfer restrictions, fair-value level, accounting classification, and whether the label affects portfolio eligibility.

Common Mistakes

  • Treating eligibility or accounting classification as investment merit.
  • Ignoring liquidity, transfer restrictions, ownership rights, and valuation inputs.
  • Comparing securities from different markets without checking currency and settlement.
  • Using a broad market-universe label without defining what is included and excluded.

This page is educational and does not recommend a specific investment strategy, security, tax treatment, or account choice.

In this section

Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.

Control Securities

Securities held by an issuer affiliate that may face resale restrictions because the holder can influence or control the company.

Level 1 Assets

Fair value assets measured with quoted prices in active markets, typically the most observable fair-value hierarchy category.

Level 2 Assets

Fair value assets measured with observable inputs other than direct quoted active-market prices, such as yield curves or comparable trades.

Level 3 Assets

Level 3 assets are fair value measurements based on unobservable inputs, models, assumptions, and expanded valuation disclosure.

Noncovered Security

A security for which a broker generally is not required to report cost basis to the IRS, shifting more recordkeeping to the investor.

Revised on Sunday, June 21, 2026