Amortised cost required the same estimation of future cash flows as a dcf used to derive fair value. Any resulting changes in those cash flows are taken as a gain/loss in amortised cost as they are in FV. Theoretically discount rate and optionality surrounding secondary sales in a FV model are the principal differences. Given most the volatility comes from changes in cash flow estimates (not changes in discount rates - assume cash flows risked and thus not adjusted through discount factor ) there isn't much difference between the two. There is a big misconception as to what amortised cost entails for such assets. It doesn't mean you set an amortisation profile and forget it regardless of how your original cash flow estimates ( used to determine original effective interest rate) change subsequent to purchase.....
PNC Price at posting:
$2.40 Sentiment: None Disclosure: Not Held
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